Text/Mei Xinyu (Research Fellow, Academy of International Trade and Economic Cooperation, Ministry of Commerce)
According to the People's Daily, a few days ago, h&m's statement of "deactivating Xinjiang cotton" caused strong dissatisfaction among Chinese netizens. The Chinese Ministry of Foreign Affairs, the Ministry of Commerce, and the China Consumer Association have also spoken out one after another, and the China Consumer Association pointed out that this practice has seriously hurt the feelings of Chinese consumers and infringed on the legitimate rights and interests of consumers; the Ministry of Foreign Affairs has clearly stated that pure white and flawless Xinjiang cotton cannot be smeared and defiled by any force; and the Foreign Ministry has emphasized that the Chinese people do not allow some foreign enterprises to eat Chinese rice and smash Chinese bowls. Calls for the defense of cotton in Xinjiang are growing.
Why defend Xinjiang cotton? Cotton itself is an indispensable basic product and basic industry for the national economy and people's livelihood, and the cotton industry is of great significance to the basic people's livelihood, national employment and exports, and plays an irreplaceable and important role in the economic and social stability of Xinjiang and the Corps and in safeguarding national unity; in the context of the current intensification of international competition, we cannot but be vigilant and guard against the attempts of anti-China forces to create a "domino effect" with Xinjiang as a breakthrough.
First, what is the importance of the cotton industry?
In ordinary times, the importance of the cotton industry is reflected in the following aspects:
First of all, food, clothing, housing and transportation is the most basic people's livelihood needs, especially the Chinese people are particularly fond of children, more and more generally pay attention to children's clothing (especially intimate clothing), towels, etc. to use cotton materials, infant clothing, towels, etc. This kind of emphasis is particularly strong. If there is a shortage of cotton and its products, the lethality of Chinese society that attaches importance to the family is completely different from the social lethality of some people who lack a sense of family responsibility.
Secondly, as the largest producer and consumer of cotton for many consecutive years, although China will not change its policy orientation of efforts to expand imports, from the perspective of the global epidemic and the current international political situation, the risk of domestic downstream industries encountering unfriendly countries "supply cuts" has risen sharply, to ensure domestic cotton demand and the stability of the world cotton market, China needs to ensure the stability of domestic cotton production more than in previous years, and can not rely too much on imports.
Third, the cotton textile and garment industry has made great contributions to employment and exports in the country. China has been ranked as the world's largest textile and garment exporter for decades, even after bearing the pressure of the sharp rise in the cost of labor, land and other factors to promote the outflow of some garment processing links, coupled with the impact of the new crown epidemic, in 2020, the overall shrinking of global trade in goods, China's "textile yarn, fabric and products" exports still soared by 30.4%, reaching as much as 1.07 trillion yuan, which shows the international competitiveness of China's textile industry and the strong ability to adjust to adapt.
As a large country with 1/5 of the world's population, no matter how much China wants to upgrade its industrial structure, it needs traditional labor-intensive industries of sufficient scale to provide employment opportunities for the country, and these traditional industries can provide demand for high-tech industries from multiple channels.
Second, cotton production "Xinjiang miracle"
Cotton production in Xinjiang was once insignificant in the whole country, and the Chinese People's Liberation Army stationed in Xinjiang and put into production and construction of the establishment system started the process of "Xinjiang Miracle" of cotton production in the past 70 years.
At the time of the founding of the People's Republic of China in 1949, Xinjiang's cotton output was 5,100 tons, accounting for 1.1% of the total national output (444,000 tons) that year; with the country's comprehensive investment in post-war economic recovery, Xinjiang's cotton output increased absolutely, but the proportion of cotton in the country continued to decline, in 1950 and 1951, Xinjiang's cotton output was 6400 tons and 8900 tons, accounting for 0.9% and 0.86% of the total national output that year, respectively.
In 1949, Chairman Mao Zedong issued the "Instruction on the Participation of the Army in Production and Construction in 1950", calling on the whole army to "undertake part of the production tasks except those who continue to fight and serve, so that our People's Liberation Army is not only a national defense force, but also a production army, so as to cooperate with the people of the whole country to overcome the difficulties left over from the protracted war and accelerate the construction of new democracy." "On January 21, 1950, the Xinjiang Military Region issued a large-scale production order, all military personnel participated in labor production, the vigorous reclamation of the border was fully launched, the production troops of the Xinjiang Military Region and the Xinjiang Production and Construction Corps developed from it quickly grew into a new force and pioneer in the development of cotton production in Xinjiang, and the proportion of cotton output in Xinjiang and the total output of the country continued to rise.
Since the 1990s, driven by a series of factors such as the acceleration of national industrialization, technological progress, and the government's promotion of cotton production transfer, the expansion of cotton production in Xinjiang has accelerated significantly; since the beginning of the 21st century, Xinjiang's cotton production has soared:
In 1956, Xinjiang's cotton output was 45,800 tons, accounting for 3.2% of the country's total output (1.496 million tons) that year, breaking through 3% for the first time.
In 1986, Xinjiang's cotton output was 216,100 tons, accounting for 6.1% of the total national output (3.5404 million tons) that year, exceeding 6% for the first time.
In 1990, Xinjiang's cotton output was 468,800 tons, accounting for 10.4% of the total national output (4.5077 million tons) that year, exceeding 10% for the first time.
In 1994, Xinjiang's cotton output was 882,100 tons, accounting for 20% of the country's total output (4.341 million tons) that year, exceeding 20% for the first time.
In 1998, Xinjiang's cotton output was 1.40 million tons, accounting for 31% of the total national output (4.501 million tons) that year, exceeding 30% for the first time.
……
By 2020, Xinjiang's cotton output will be 5.161 million tons, accounting for 87% of the total national output (5.91 million tons) that year; of which the corps cotton output will be 2.1341 million tons, accounting for 36.1% of the total national output and 41.4% of Xinjiang's output. In just 8 years from 2012 to 2020, Xinjiang's cotton production increased by 33 percentage points in the country.
What does the cotton industry mean for Xinjiang's economy?
Since Qianlong pacified Xinjiang, Xinjiang's finance and economy have relied on inland transfer payments; correspondingly, the development of local industries with market competitiveness to reduce dependence on transfer payments has become the key to Xinjiang's sustainable economic and social development.
As far as the Qing Dynasty is concerned, according to the eighth volume of Song Jun's "Jingding Xinjiang Zhiluo", the 1,400 local administrative officials stationed in the area spent 688,900 taels per year, of which 610,000 taels were spent from the central government and the remaining 71,790 taels were transferred locally, and the main source was not taxation from the local "entanglement" (the predecessor of today's Uyghurs), but the income from operating official hotels and selling tea to soldiers.
In contemporary times, the Xinjiang Corps was formed in 1954 and the Xinjiang Autonomous Region was established in 1955. From 1950 to the present, except for the seven years of 1952, 1954, 1957, 1962, 1963, 1964 and 1966, all the other years have been deficits in fiscal revenue and expenditure at this level, relying on central fiscal transfer payments to make up for the gap. Its expenditure-to-income ratio (fiscal expenditure at this level / fiscal revenue at this level ×100%), which fluctuated several times, reaching 876% in 1975, steadily exceeding 200% since 1994, exceeding 300% in 9 years from 2000 to 2019, and always exceeding 300% in 2016-2019, 319%, 316%, 326% and 337% in turn.
In this case, the cotton industry as a pillar industry in Xinjiang has an extraordinary status. In practice, with the growth of production, the cotton industry has leapt to the pillar industry of Xinjiang decades ago, and is called "two black and one white" along with oil and coal. In 2019, Xinjiang's cotton output was 5.002 million tons, which was calculated according to the target price of Xinjiang cotton of 18,600 yuan / ton, which already constituted a 100 billion yuan industry; coupled with upstream and downstream related industries, cotton's status in Xinjiang's economy, finance and employment was more prominent.
Further in-depth analysis shows that the importance of the cotton industry in Xinjiang's economy greatly exceeds its proportion of output value. Because Xinjiang's mineral pillar industry not only accounts for far less than cotton in the national production and consumption, but also often needs invisible subsidies, and production fluctuations are also large. In contrast, even without financial subsidies, Xinjiang's cotton industry can survive and develop in open market competition, and output fluctuations are significantly smaller.
Take Xinjiang's oil and gas industry as an example. Xinjiang's crude oil and natural gas production accounts for far less than cotton's total production and consumption:
In 2020, the national crude oil output was 194.769 million tons, and the imported crude oil was 542.39 million tons; excluding the 28.35 million tons of refined oil imported in addition, the total national crude oil consumption in that year was 737.159 million tons. In the same year, Xinjiang's crude oil output was 29.1475 million tons, accounting for 15% of the country's crude oil production and 3.95% of the country's total crude oil consumption.
In 2020, the national natural gas output will be 192.5 billion cubic meters, and the imported natural gas will be 101.66 million tons, which is converted into 1390 cubic meters of one ton of natural gas, and the imported natural gas will total 141.3 billion cubic meters。 Regardless of re-exports, domestic production and imports totaled, and the total national natural gas consumption in that year was 333.8 billion cubic meters。 In the same year, Xinjiang's natural gas output was 36.983 billion cubic meters, accounting for 19% of the country's natural gas production and 11% of the country's total natural gas consumption.
It can be seen that whether it is Xinjiang crude oil or Xinjiang natural gas, the "jianghu status" in the market is not the same as Xinjiang cotton accounting for 87% of the country's total output.
At the height of the subprime mortgage crisis in 2009, oil prices in the international market plummeted, and Xinjiang's crude oil production decreased from 27.151 million tons in the previous year to 25.129 million tons, and only exceeded the 2008 level in 2013.
Xinjiang's crude oil production peaked at 28.753 million tons in 2014, and due to the avalanche of oil prices in the international market in the second half of 2014, Xinjiang's crude oil production fell all the way down to more than 25 million tons in the following years, and only rebounded to 26.099 million tons in 2019, which is not yet the level of 2008 (see table below).
However, by 2020, Xinjiang's crude oil production once again exceeded the peak of 2014.
There are similar fluctuations in xinjiang's natural gas production, but the fluctuations are not as pronounced as in crude oil production.
Fourth, international competition enhances the significance of defending Xinjiang's cotton industry
The foundation is not solid, the ground is shaking, and the dispute between China and the United States over the fortunes of the great powers is to first seek undefeated and then win. From the overall perspective of stable economic and social development, when the trade war broke out in 2018, the key to China's economic stability and development fell on the three major industrial sectors of "grain (cotton, oil and meat) + energy + high-tech industry"; among them, "grain (cotton, oil and meat)" and "energy" determine whether China's society and economy can be stable as a whole, and the high-tech industry represented by IT determines whether China can win and develop in international competition. At present, the international economic and political situation is further complicated, and anti-China forces regard Xinjiang as the best entry point to shake China's foundation, further enhancing the significance of defending Xinjiang's cotton industry.
Normally, the two countries do not interfere in each other's internal affairs, and bilateral dialogues discuss bilateral and global affairs; however, in a high-level U.S.-China strategic dialogue held a few days ago, U.S. Secretary of State Antony Blinken began by explicitly threatening to discuss "both domestic and global priorities" with China, that is, to interfere in China's internal affairs He also made it clear that he would "discuss our deep concerns about China's actions, including those in Xinjiang, Hong Kong and Taiwan." Although the US side was reprimanded and disgraced by our side in this opening remark, its intention to "pick quarrels and provoke troubles" by taking advantage of the Xinjiang issue has been once again exposed.
Under such circumstances, Chinese society cannot but react forcefully, rationally, favorably, and in a measured manner to the attempts of anti-China forces to "block" cotton in Xinjiang. One of the biggest potential risks that China needs to guard against in order to maintain economic and financial stability is that the weak links in the local economic and political chain have been opened by market panic and speculative attacks, and market expectations have deteriorated rapidly across the board, eventually triggering systemic risks and shaking the overall situation of the national economy.
Edited by Chen Li Proofreader Liu Baoqing Chen Diyan