Empirical Analysis of Cotton Imports’ Effect on Our Current and Long Term Production and Sales

Abstract

Studies related to this paper mainly adopted model GTAP and ATPSM to explore the effect of importing on our cotton industry. To ensure the interest of weak group in the cotton industry— the farmers, the paper used cointegration method to study the relationship between imports and sown area as well as sales, set up Error Correction Model to explore the current and long term effect of cotton importing on production and sales. The paper came to the conclusion: under open condition, the complementary between imported cotton and domestic one increases. Because of large subsidy to imported cotton, the paper puts forward the following countermeasures: we should improve our cotton subsidy policy and initiate the domestic minimum purchase price policy.