A Study On Comparative Advantage In Cotton-growing Regions Of China

Cotton is one of the most important cash crops in China, and China's cotton production has taken a leading position home and abroad. Experiencing the structural adjustment move launched in the early 1990s, new regional patterns of cotton production in China has formed, now cotton-growing areas in China are grouped into three major regions: the middle and lower reaches of Yangtse River Huanghe-Huaihe-Haihe Plain s Northwest inland covering South and North part of Xinjiang. Theoretically, complete free market mechanism will arrange agricultural production spontaneously according to the principle of comparative advantage. But the fact is that: owing to non-market intervention factor, the integrated domestic market of agricultural products hasn't formed and agricultural production is somewhat haphazard and self-sufficient in China. Which implies that the current regional pattern of cotton production doesn't bring the theory of comparative advantage into full play. Therefore it is meaningful to point out the current situation changing trend of comparative advantage of each cotton-grwoing province, which will offer a scientific basis for regional policy makers.The theory of comparative advantage tells us that, in open economy, every country should arrange her domestic production and trade according to the principle of comparative advantage. In addition, the theory also asks every country to reallocate the production regions and adjust each region's production structure in terms of regional comparative advantage. Measuring the comparative advantage is to make sure the direction of structure adjustment.On the basis of the theory of the comparative advantage and cotton production in China, the paper compares the natural conditions of cotton-growing regions; analyzes the costs and profits of Yangtse River valley cotton-growing region Yellow River valley cotton-growing region Northwest inland cotton-growing region in 1999 and 2002; calculates Aggregated Advantage Coefficient(AAC) from 2000 to 2002 to research the regional comparative advantage of cotton in China.Finally, this paper yields four major conclusions:1. The Aggregated Advantage Coefficient (A AC) shows that Northwest inland of Xinjiang has significant advantage in cotton production.2. Considering the natural conditions, the three major cotton production regions have their own advantages and disadvantages respectively.3. The Yellow River basin covering Hebei, Shandong, Henan has advantage in cotton production, it benefited from the adoption of new cotton variety such as Bt(Bacillus thuringiensis) cotton and Shorted-Season Upland Cotton, which ensure the quality of cotton and reduce production costs.4. The Yangtse River valley including Anhui, Jiangsu, Hubei is less competitive in cottonproduction, owing to the climate influence, the quality of cotton is lower. Interpretation of conclusions:1. Technological change influences the comparative advantage of some cotton-growing regions, promotes the structural adjustment.2. Changes in market demand and market integration transform the comparative advantage of some cotton production regions.Based on the above conclusions, the policy implications are as follows:1. In order to provide the cotton industry with advanced technology, the government should pay more attention to R&D and technology innovation.2. The department related should speed up the structural adjustment aiming at improve cotton varieties quality and optimize cotton production distribution in China.3. The government should adopt effective measures to reduce cotton production costs and increase farmers' income.4. After China's accession to WTO, we should make good use of "Green Box" policy to improve domestic support for cotton production.5. The government should strengthen macro-management to accelerate cotton industry development.