Under The International Market Power China’s Cotton Import Of Large-country Effect Research

In 2014, under the background of global commodity prices declined steeply and the Chinese "new normal" economy, the international commodity market due to the imbalance between supply and demand, from the seller’s market that once who is in charge of who has the resources, into a buyer’s market. Among them, one of the commodities, cotton, also experienced a sharp decline in international prices.China, the world’s largest cotton production, consumption and import country, the change of cotton supply and demand situation caused by the economic slowdown is particular concerned. Chinese imports at the end of a decade of high volatility, recently ushered in a sustained substantially reduced. At the same time, the international price is no longer sharply higher volatility. In recent years, the international cotton price volatility, sharply higher as a whole, which has caused a tremendous impact on China’s economy and made the cost of imports surge. Chinese imports increased brings the corresponding international prices rose, but imports plummeted has not led to a corresponding change in the degree of price. The advantage of China’s cotton imports, cannot control the world market price. Thus, as cotton trade big country, China can only passively accept the international price, and did not get the market position and the buyer monopoly interests corresponding market share.By studying VAR model we found that China has a distorted large-country effect in the international cotton trade. China’s cotton imports increase will lead to a rise in the world price of cotton, so China has to suffer losses caused by rising prices, but the international cotton prices has little impact on China’s cotton imports. By measuring the large-country effect discriminant coefficients are found, before 2014, China’s cotton trade reflected the negative effect. After this, the trade is showing a positive effect, as China imports significantly reduce, a positive effect on the country began to appear.The large-country effect is divided into the total effect and the structure effect, and the international market power as the determination of overall welfare, is a suitable angle to study the structure effect. Through the panel data and the SMR model, this article draws the following conclusion:China’s cotton imports to India, the United States, Australia, Brazil and other export power does not have a buyer’s market power, only to Uzbekistan, Cameroon, Mali and the Ivory Coast country have a certain market potential force.Further discussion that China’s buyer power is weak in the international cotton trade mainly lies in the huge gaps in domestic demand and price control of export major country. Starting from the perspective of the major importer of China, the discussion is focused on the decisive factor of the international buyer’s market power, elasticity of demand, and that China’s cotton imports is mainly affected by the impact of domestic demand and international price. According to the research of difference demand model, we find that China’s cotton import has obvious rigid demand, the import fluctuation mainly comes from the change of national income, and the effect of price change on demand is very small.Finally, according to the Putty-Clay theory to construct the quantity-price game model between China and the cotton exporting countries, thinks that when China and other cotton exporting countries in international trade, can obtain a buyer’s market power, by reducing domestic cotton prices or prices of substitute, appropriate reduce imports and importing countries to diversify sources. Effectively solve trade dilemma of China’s cotton imports, eventually turn the international market commodity slump and downturn, to the opportunity of get into the international market forces. Through the establishment and master the right to speak of commodity, gradually change the supply side’s monopoly on global commodity pricing. By making more influence in commodity prices, achieve the real transformation from a big trade country into a powerful trade country.