ANNOUNCEMENT 01 Sep 2011

In September 2011, the government of China announced a change in private-sector financial support.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising
Inception date: 01 Sep 2011 | Removal date: open ended
Still in force

Financial grant

 On 1 September 2011, the Chinese government introduced a reserve programme targeted at purchasing excess supply of cotton.
The scheme would involve the government buying cotton at 19'800 RMB (ca. 3'000 USD) per tonne between September 2011 and March 2012 - the period when cotton prices usually fall below the state purchase price. The state aid was renewed in the years 2012 and 2013 with higher price thresholds (ca. 3'300 USD/tonne). However, given that market cotton prices changed in the selected time frame, it remains unclear whether the 2012 change represented an expansion or contraction of the state aid at hand.
The programme was aimed at supporting the domestic industry but ultimately lead to growing excess world supply of cotton (cf. Secondary Sources). In the 2012/13 season, for instance, the reserve purchases amounted to 87% of China's cotton crops. The reserve programme was largely replaced with a direct subsidy scheme in 2014 (cf. Related Measures). Nonetheless, the reference price system was kept in tact for the Xinjang province, China's by far largest cotton producer.
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.

AFFECTED SECTORS