A market inspection mechanism is being established for China's cotton industry to overview the cotton output, demand and imports of the country, according to a veteran cotton observer.

"The mechanism, which contains four layers, aims to co-ordinate the whole industry," said Yang Zhaoliang, deputy secretary-general of the China Cotton Association (CCA).

The fundamental component of the mechanism is a database in which experts will collect detailed information about the cotton industry including sewing, producing, stock and trading.

"We hope to dispatch our employees or agencies to be responsible for the information-collecting in each county," said Yang, adding that this level was the most important one.

He explained that the information-collecting system would determine the accuracy of the final results.

The second layer is a panel composed of analysts and experts, who will meet regularly to exchange views on situations and trends in the sector.

"The first conference has been held recently," Yang said. "When the mechanism is fully in place, similar conferences are expected to be held once a month."

The third layer is a prior inspection system to monitor and respond to fluctuations in cotton prices, demand and stock.

In the fourth and last layer, all of the information and analysis gathered will be released to manufacturers, traders and farmers via the media, particularly through websites.

"We hope this mechanism will help the farmers and traders stay informed regarding the latest statistics so as to avoid blind investment in this sector," said Yang.

Cotton prices reached 18,000 yuan (US$2,176) per ton earlier last year, but the figure was less than 12,000 yuan (US$1,446) in January of this year.

Some cotton growers felt hurt by the sharp decrease and have decided to turn to other crops this year.

Surveys on farmers' new-year plans conducted by several relative institutions all showed the country's cotton growing area is set to decline some 10 to 18 per cent this year.

The acreage decrease is expected to result in a gap between the country's cotton supply and demand.

China has announced it will increase the governmental purchase price of cotton to 12,000 yuan (US$1,446) per ton from last year's 11,500 yuan (US$1,386) per ton right before planting begins in a bid to protect the cotton farmers.

The government's move is being interpreted as a sign that the price of cotton may be returning to higher levels.

"It is too difficult for me to predict cotton prices for this year, as a number of uncertainties have been imposed on them," said Yang.

He referred to the attempts of the United States and the European Union to re-impose limits on textile imports from China through the imposition of safeguard measures.

The US has launched an investigation into its textile and apparel imports from China to determine whether to enact safeguard measures against them.

April and May have traditionally been an off-season for China's garments makers, but Sun Yunbiao, deputy general manager of Younger Group, said the firm had already billed 40 to 50 per cent more orders for the two months this year compared with last year.

"Afraid of possible safeguard measures, which some predict will come in July or August, some of our US clients hope to import more in the coming two months," he explained.

However, the textile manufacturers' demand is expected to decline if the safeguard measures go through.

(China Daily April 13, 2005)