Creatively conducting macro-level regulation in cotton industry

According to the report delivered at the 19th CPC National Congress， we adhere to the direction of socialist market economic reform and respect the decisive role of market in resource allocation while giving full play to the role of the government. We should optimize industrial policy and carry out macro-level regulation in a sound manner. Policy for rotational storage of state-reserved cotton blazed a trail by conducting macro-level regulation in the realm of cotton industry， in which the market played its decisive role in the allocation of cotton resources and the mechanism operation at the macro-level regulation was realized. Thus we can expect the active exploration and successful practice of giving full play the role of government.

According to the storage target and under the unified leadership of the NDRC and the Ministry of Finance， storage policy for state-reserved cotton guided and managed market project in a rational and scientific way and acted on intermediate target through such policy instruments as market research， the decision-making system of joint meeting， and various conference platforms， hence the achievement of storage target. Since Analysis of Cotton Quality in China in 2015， storage policy for state-reserved cotton has been implemented in an orderly way. We saw cotton stocks decrease at a fleet speed， cotton market operate in a stable manner， and cotton textile profits grow in a large amount.

First， we established the cotton industry planning and policy mechanism at a macro level. Policy making department， during the process of planning， saw clearly the sensitiveness and efficiency of the macro-level regulation through comprehensive investigation and study， and commanded a rational understanding of the balance between cotton supply and demand and of internal logic between industrial-commercial inventory and market change in accordance with forward-looking， scientific， continu- ous and guiding principles. Besides， the department with coordination of relevant executive bodies introduced policies and principles， dealt with relevant selling details in terms of quality， time and price. When it comes to policy implementation， industrial chain running trend is under severe supervision， and timely evaluations of policy effectiveness are made. Following market operation and supply-demand trends， China Fiber Inspection Bureau together with China National Cotton Reserves Corporation continuously strengthened the quality inspection over national stored cotton and optimized the allocation of storage warehouse， ensuring that the rotational policy is fully implemented. In accordance with selling target， the policy making department timely coordinated and improved policies. The storage policy formed an increasingly-improved operation system for policy mechanism going through the process of planning， formulation， releasing， implementation， effect evaluation， and supervision； the macro-control policy planning and policy mechanism in the cotton industry constituted the core and main part of mechanism at the macro-level regulation.endprint

Second， regarding the information platform as the carrier， we constructed an effective macro-control mechanism. The market mechanism， mainly consisting of price mechanism， supply and demand mechanism， competition mechanism and risk mechanism， allocates resources in the market by regulating production and circulation through market price information. In the process of market competition， the supply and demand of commodity along with its information disseminating casts influence over market expectations. In that case， the fierce competition between supply and demand exists， forming the price in the market. Emergency popping up， the market price soared， which impends the stable market performance. During the preparation of storage policy， the policy making department on the joint conference and other conference platforms and decision-making mechanisms formed a fast and effective channel for information exchange between policy making side and market subjects. In terms of key points or difficult points， the department reached by exchanging views through information exchanging platforms a basic consensus between policy makers and industry / market subjects. Besides， it guided and managed market projects in a sound manner， dealing with the asymmetry between policy and market. The policy measures and related mechanisms by the government indirectly affect the judgment and expectation of entities to the market. In that case， entities take their business actions to stabilize the whole cotton market， hence promoting the economic growth of cotton industry while managing the volatility of business cycle. The information platform constitutes the “tie” among the macro-prudential management mechanisms of cotton industry， making itself the carrier of macro-control mechanism. In accordance with the inherent law of conducting macro-level regulation， information platform and commodity market， the storage policy introduced into cotton industry the fresh new management mode at macro-level regulation， leading the industry towards a normative， orderly and transparent way by constructing an effective macro-control mechanism.

Third， we made innovation in floor price， giving full play to the market in the field of national cotton allocation. The slumping global economy and the downward pressure on domestic economy continued to exist. And a continuing release of cotton into market would definitely hit the already-fragile cotton market as well as cotton industry and textile industry in a further term. The storage policy was faced with the dilemma of how to put cotton into market in a effective way.endprint

The key to the challenge was to establish in a rational way the selling quality and price. The policy making department creatively laid out the pricing mechanism that gave the floor price， so that the market can play its role in the field of market. Meanwhile， the principle of “dynamic determination according to mar- ket situation； floor price connected with spot price； pricing by taking the average of cotton price home and abroad， and monthly adjustment of the cotton price” protected the competitiveness power of domestic cotton textile industry on national stage by ensuring that the floor market changed with market condition while cotton pricing in domestic or international market was connected.

The storage policy that strengthened cotton textile industry and vitalized cotton industry links was popular with the market and industry as well. Such a policy helped national stored cotton flood into market in a large scale， saving the cotton industry from systematic crisis.

Forth， we conducted the well-timed regulation to ensure the flexibility and accuracy of storage policy. One of inherent features of market is that the market itself is undergoing instantaneous changes. Cotton goods have long been the commodity at home and abroad. Except for supply and demand， there existed carious finance-relating factors that affected the cotton price， hence the complexity and uncertainty of cotton market.

While making efforts in relevant principles， we made room for the post adjustments or resets for the storage policy. According to the new changes of market， the policy was doing its utmost to provide timely counter-tools and doing its part in well-timed regulation. The policy making department kept an eye on the market situation so that it would not lose sight on problems popping up and then it could make responses with countermeasures to any potential risk. Such doing ensured its reply to market concerns， its reaction to stabilize market project， and its goal to build market consensus. All of these efforts facilitated the accurate match of optimized quality structure and large-scale quality between market and cotton releasing， and a regulating and effective policy.endprint