Significant Results Achieved in Xinjiang’s Cotton Target Price Reform

　　In recent years, influenced by the global economic situation, international agricultural commodity prices have fallen sharply. At the same time, domestic prices for major agricultural commodities have gradually risen due to a combination of government support measures—such as temporary state procurement and minimum market protection prices—and steadily increasing cotton production costs. This has led to a widening gap between domestic and international agricultural prices, resulting in a flood of imported agricultural products into the domestic market, the erosion of tariff protection, high levels of domestic inventory, and an increased fiscal burden.

　　In 2014, in order to address longstanding challenges, the state launched a pilot reform of the cotton target price system in Xinjiang. Over the past three years, all localities and departments across the autonomous region have collaborated closely, and market entities have actively participated, resulting in remarkable achievements in the pilot reform. The initiative has earned broad recognition from the central government and various sectors of society, offering important insights for the healthy development of Xinjiang’s agriculture and for the ongoing deepening of supply-side structural reform in the agricultural sector.

　　First, a market-based pricing mechanism oriented toward market demand has been largely established, bringing market prices back to normal levels. The government no longer intervenes directly in the market; the price gap between domestic and international cotton markets has narrowed significantly; the competitive environment for domestic textile enterprises has improved; tariff protection is gradually being restored; and seed-cotton purchase prices now fluctuate in tandem with local supply-and-demand dynamics as well as with domestic and international futures and spot prices for lint cotton.

　　Second, the entire cotton industry chain has been revitalized, and market mechanisms have been fully brought into play. Following the implementation of the cotton target-price reform, integrated development across the value chain—from production and processing to textile manufacturing and apparel—has accelerated markedly, agglomeration effects have strengthened significantly, and the strategic layout of the entire industry chain has taken shape at a faster pace. With the government no longer intervening in market prices, all cotton-related entities now operate directly in the market and assume a portion of market risk. Overall, market awareness and risk awareness among these entities have further improved, the market-driven incentive mechanism has become more effective, and the international competitiveness of China’s domestic cotton industry has been restored and enhanced.

　　Third, it has safeguarded farmers’ interests and boosted the development of Xinjiang’s textile and apparel industry. During the past two years, when market prices remained sluggish, the target-price subsidy has served as a crucial source of income security for Xinjiang’s cotton farmers, enabling them to anticipate stable basic earnings. In addition, reduced cotton-input costs and a series of supportive policies introduced by the regional government to foster the growth of the textile and apparel sector have injected fresh momentum into the industry. As a result, domestic textile and apparel firms have accelerated their relocation to Xinjiang, leading to a marked increase in industry utilization rates and profitability. This has significantly expanded employment opportunities for surplus rural labor in Xinjiang, thereby playing a positive role in maintaining social stability and long-term peace and prosperity in the region.

　　Fourth, the target-price policy has begun to deliver tangible benefits, further optimizing the structure of Xinjiang’s crop production. Farmers now base their decisions on the cotton target price to project their annual cotton-growing returns, enabling them to more flexibly select suitable crops for cultivation. By leveraging market-based mechanisms and employing expectation management to adjust the cropping structure, the policy has produced remarkably positive results. The successive reductions in the target price have effectively reduced cotton acreage in Xinjiang by 7.657 million mu, guiding all suboptimal and high-risk cotton-growing areas to completely exit cotton production. This has reversed the longstanding pattern of uncontrolled expansion in cotton acreage, leading to more rational allocation of water and soil resources and effective protection of the ecological environment.

　　Fifth, awareness of cotton quality has significantly increased, and the pace of adjusting the variety and quality structure of cotton has accelerated. The current target-price subsidy for cotton is a uniform subsidy applied across the entire Xinjiang region; by improving cotton quality at each stage of production, producers can achieve higher returns, which to a certain extent has enhanced their awareness of the need to adjust cotton quality at all stages.

　　On March 16, 2017, after thorough consideration of the future development of the domestic cotton industry and the unique regional conditions in Xinjiang, and with the approval of the State Council, the National Development and Reform Commission and the Ministry of Finance jointly issued a document stipulating that, starting in 2017, the reform of the cotton target price system would be further deepened in Xinjiang. The target price for cotton would be set for a three-year period and maintained at RMB 18,600 per tonne. For Xinjiang, on the one hand, the state has provided a sustained and stable reform policy, which further safeguards the fundamental interests of cotton farmers and consolidates the position of the Xinjiang cotton industry; on the other hand, the state has raised the requirements for the reform, calling for greater attention and more rigorous implementation of all reform measures to ensure the smooth advancement of the reform.