Seminar on South-South Co-operation for Cotton Sector Development

By Deputy Director General Chai Xiaolin

November 22, 2007 in Geneva

Ladies and Gentlemen,

Good morning.

I am very pleased to attend this Seminar on South-South Co-operation for Cotton Sector Development which is held back to back with the Global Review of Aid-for-Trade just successfully concluded yesterday. And so, our meeting today is opportune and of special significance. Today, I also have the privilege to have two senior Chinese Experts on cotton with me: Mr. Qi and Mr. Nan who will be available for questions and answers.

As requested, my presentation will focus on three parts: first, China’s aid to African nations in cotton sector; second, China’s experience and practices in cotton-planting and plans of cooperation with African countries; third, China’s experience and practices in cotton-processing, and future plans with African countries.

1. China Fully Supports the Aid for Trade Initiative

Modest improvements have been made in trade-related technical assistance and capacity-building for developing countries since the commencement of the Doha Round. However, such assistance falls far short of needs. Therefore, as an effective supplement to the Doha Round, Aid for Trade work programme was approved by 2005 WTO Hong Kong Ministerial Declaration - a concrete step forward from years of efforts. China fully supports the ministerial decision to assist the developing and the least developed countries to address the problems of weak infrastructure and insufficient international trade capacity so that they could effectively implement WTO agreements and involve themselves in and benefit from international trade.

2. China’s cooperation with the African countries in Cotton Sector

China and African countries enjoy a time-honoured friendship. China pursues a line of peaceful development and intends to develop friendly ties with African countries following the basic principles of respect for sovereignty and equality and mutual benefit。

As I have mentioned earlier that Cotton is of high importance for the African countries. Over 10 million people in West Africa depend their livelihood directly or indirectly on cotton-producing. Cotton export accounts for 77% of the total export in Benin, and 18% in Mali. China fully understands the importance of cotton to the African countries. For a long time, China has been providing aid of various forms to promote the development of cotton and textile industry in Africa.

● Trade in Cotton

In 2006, China imported cotton from African countries of $7,250 million, a 7.1% up over the previous year. Out of this amount of import, $82.07 million came from Benin, $29.48 million from Chad, $1,070 million from Mali, and $1,930 million from Burkina Faso.

Furthermore, China provides duty-free treatment to most of the products exported by the 41 LDCs having diplomatic relations with China. These products include cotton, textile and clothing products, accounting for 93% of the total export volume of these LDCs to China. These measures promote trade balance and healthy development of economic relations between China and those countries.

● Aid Projects in Cotton Sector

China’s aid programmes to the African countries primarily through means of provision of financial resources, investment, preferential loans and training programmes in the cotton sector.

Financial resources and in-kind assistance: The Chinese government has financed more than 20 cotton and textile projects, as well as providing agricultural machines, fertilizer and pesticide.

Investment: By the end of 2006, China had totally invested $18.63 million in African textile industry.

Preferential Loans: Chinese government began to provide preferential loans to African countries in 1995. Under the arrangement of preferential loans, Chinese companies actively cooperated with recipients and developed some large-scale projects in cotton and textile industry. These projects greatly enhanced local employment and increased fiscal tax revenue of local governments. Company of Benin Textile (CBT) can serve as a good example.

Training: China has actively developed textile technical assistance and training program to the African ountries to enhance their cotton-processing level and textile production techniques. From 2005 to 2006, the Ministry of Commerce of China held 6 textile industry workshops to the African countries, 117 African textile officials participated in the workshops. In October 2006, MOFCOM held the Seminar on International Trade in Textile. 13 Ministerial level officials from 7 African nations including Benin attended the seminar.

● Aid to Benin and Mali in Cotton Sector

Benin: the primary forms of aid to Benin are providing resources such as agricultural machines, fertilizers and pesticides, as well as building the Lokossa Textile Company with preferential loans.

By the end of June, 2007, Chinese government had provided agricultural inputs to Benin 5 times, in the amount of RMB 15 million. In recent years, aid in this field has been enforced, e.g., RMB 8 million worth of agricultural equipment and resources were provided to Benin in 2006.

According to the Preferential Loan Framework Agreement jointly signed by China and Benin on 18 June, 1998, China provided RMB 150 million preferential loans to Benin. This loan was used to establish CBT jointly by China and the Benin side. CBT is the biggest textile company in Benin now.

Mali: The primary form of aid was establishing the Segou Textile Mill. In 1994, a joint venture-- COMATEX S.A (La Compagnie Malienne des Textile S.A) was established on the basis of the Mill.

The last 30 years of reform and opening-up has helped China promote trade and economic development. Nevertheless, China is still a developing country and is under many constraints, which has limited its ability to increase its foreign aid. However, China will continue to attach great importance to aid in cotton sector to African countries and broaden its economic and technological cooperation with African countries through various forms of foreign aid with maximum flexibility.

3. China’s Experience and Future Sino-Africa Cooperation Plans in Cotton Production

●  China’s Experience and Practices

China has mature practices and experience in cotton production. Compared with normal cotton yield of 300 to 400 kilograms per hectare in West Africa, China’s yield of cotton is averaged roughly at 1,200 kilograms per hectare. Its production experience includes:

① selecting right location

In recent years, China’s cotton planting area has been maintained at a level over 5 million hectares, mainly in the following 3 major producing areas which cover 13 provinces: the Yellow River Valley, the Yangtze River Valley and the Northwest Inland area.

②Improving soil utilization.

③Scientific seed breeding and selection

So far, China has promoted 6 variety renewals, greatly facilitated the development of cotton production.

④Innovating key technologies.

Those technologies include: seed delinting and coating, nutritive bowl breeding and transplanting, film mulching, chemical regulating and controlling, dripping irrigation under mulching film, diseases and pests controlling, scientific fertilizing, mechanical harvesting, innovated ginning, etc.

● Future Sino-Africa Cooperation Plans

There are great potential of cooperation between China and Africa in seed breeding cooperation, technical training and cotton production through joint efforts.

3. China’s Experience, Current Sino-Africa Cooperation and Future Plans in Cotton Processing

● China’s Experience and Practices

The main feature of China’s cotton processing technology is to best utilize resources and to increase added value as much as possible. This has been illustrated well by the corporate philosophy of Chinese company—“Add More Value on Cotton!” Chinese manufacturers are ready to transfer their advanced, reliable and [patented] technologies to our African friends.

After over 50 years of development, complete and mature industry system has been set up in regard to China’s cotton processing technology and machinery. The system can be divided into 3 components: ginning, delinting, and cottonseed oil & protein extraction.

● Future Sino-Africa Cooperation Plans

▪ training and research. It will be helpful for the improvement of cotton production and quality in West Africa and the promoting of bilateral exchange to establish training and exchange centers, if necessary.

In fact, Chinese enterprises are making tremendous efforts for this. For instance, Chinese Cotton Industries, Ltd. has submitted to West Africa Development Bank <The Project Proposal for Research on The Development of West Africa Cotton Industry>. This Proposal involves detailed cooperation suggestions concerning cotton production, processing, by-product processing, textile, and related trades. The West Africa Development Bank is giving priority discussions to this proposal.

▪ Great Sino-West Africa cooperation potentials in the cotton by-product processing industry.

West Africa provides rich raw materials for cottonseed deep processing. Only in UEMOA area, on the basis of cotton production of 750,000 tons in 2005/06, 1.12 million tons of undelinted seeds are produced, where about 110,000 tons of short fibers (linters) and 400,000 tons of cottonseed protein can be expected. At the current international short fiber price, the total value of short fibers cd that of protein as 160 million dollars. However, being constrained by the limitation associated with traditional technologies, those resources have not been utilized at all in the West African area, resulting in enormous wastes and losses. China’s mature production technology can help to fill this gap in West African cotton industry, upgrade technical levels, increase added values of cotton by-products, and improve people’s living conditions.

In both the traditional cotton processing industry and latest cotton by-product processing industry, the promotion and application of China’s technologies will create more values for the cotton industry of West Africa, promote its technical progress and international competitiveness, and bring a bright win-win future for the Sino- Africa cooperation!

Thank you!