The sluggish textile industry has put domestic cotton policies in a dilemma.

For the cotton market, in addition to external pressures, there are various difficulties that are hard to express. First, the global downstream textile consumption is weak, leading to high inventory levels.
Regarding the forecasts for production, sales, and inventory data, the USDA and the International Cotton Advisory Committee have different statistical standards, but their views are generally consistent.
Since 2012, the USDA has made several significant upward adjustments to inventory data in its monthly supply and demand reports. The forecast for global inventory of 13.232 million tons in the February supply and demand report was adjusted to 13.569 million tons in the March report, and then to 14.386 million tons in the April supply and demand report.
   
In the April report, the main adjustment was an increase of 762,000 tons in India's beginning inventory. The May supply and demand report continued to raise the forecast for global cotton ending inventory while lowering cotton consumption. China's inventory-to-consumption ratio reached 68.4%. After several adjustments, the USDA's forecast for global consumption in the 2011/2012 fiscal year varied by 2.5 million tons, reducing China's consumption by 1.2 million tons to just over 9 million tons.

Due to the cotton price protection policy initiated by China last year, a large amount of foreign cotton has concentrated in the domestic market, exacerbating the domestic inventory problem. The International Cotton Advisory Committee predicts that this year China's inventory will reach 5 million tons, more than double compared to last year, while global inventories in other countries and regions will increase by about 14%, reaching 8.1 million tons.
The sluggish domestic textile demand and high inventory data have put domestic policymakers in a dilemma.
On one hand, the situation of import cotton being at a discount started last year and has continued to the present. The price difference between domestic and foreign cotton is as high as several thousand yuan, leading to an increase in cotton imports. Whether to issue import quotas is a headache for the government.
Issuing quotas stabilizes the price of foreign cotton, and the national policy of price protection that started last year benefits not only domestic cotton farmers but also makes China a savior for global cotton farmers under economic downturn due to large imports.
This business, no matter how you calculate it, is a loss. If a large amount of imported inventory can be activated, after a period of high-cost digestion, it can eventually shift back to downstream consumption.
But the problem is that the sluggish downstream market has not provided such an opportunity. It's like a mute person eating bitter herbs; having accumulated so much cotton, how to digest it later is also a problem. If quotas are not issued, domestic textile companies will face high-cost cotton, and against major competitors with cheaper labor resources, such as Southeast Asian countries, domestic companies will also suffer losses.
Not to mention that other countries may adopt zero tariffs or other measures to support imported cotton, further reducing procurement costs for enterprises and widening the cost gap between China's cotton spinning and that of other countries. The government's commitment to farmers regarding storage cannot be broken. On one side are the farmers' earnings, and on the other side are the interests of textile companies; it is likely difficult to satisfy both.