The country still has to import more cotton to satisfy surging consumption needs, even though cotton harvest will hit a record high of 6.7 million tons this year, projections by the China Cotton Association said.

The estimate, released on Friday, said that the output for 2006 is 1 million tons more than last year.

Besides favorable weather, another reason for the production boom lies in the government's supportive policies to farmers in recent years, such as agricultural tax exemption and use of a high-yield species, Chen Taifeng, a professor at the University of International Business and Economics in Beijing, told China Daily.

This year the cotton planting area was 5.3 million hectares, an increase of 5 percent compared with 2005, and 75 percent of that land was sown with high-yield seed.

The average per-hectare production will finish the year at 1.2 tons, 7 percent higher than the previous year.

Even with the growth in production during the past few years, the increase in the country's imports has not slowed down, Chen said.

China imported 3.4 million tons of cotton from January to November, a 53 percent increase year-on-year, according to official statistics.

"As the world's largest producer and exporter of textile products, the shortage in the cotton consumption is huge," Chen said.

Zhou Shengtao, president of the China Cotton Association, estimated that more than half of China's cotton consumption will have to be met through imports by 2010, when domestic demands continue to outstrip production.

He said the shortage could worsen as output growth would probably be constrained by the country's limited land and water resources.

The China Textile Industrial Association had projected an annual growth rate of 7.5 percent in yarn output, which would mean a record-high annual cotton consumption of 14 million tons in 2010.

Zhou said China would produce 6.8 million tons a year by 2010 at best. "Still, there will be a shortfall of around 7 million tons."

However, skyrocketing domestic cotton demand and a big increase in production are unlikely to result in a price hike.

The price of cotton, as a sensitive commodity, is influenced by complicated factors, Chen said.

"Chinese textile enterprises turn to the global market when domestic prices jump too much," he said.

For example, cotton from the United States accounted for 40 percent of China's imports; the sizable subsidies to cotton farmers by the US Government have given it a price advantage compared with Chinese products.

"The central government will balance cotton prices by purchasing and reserving," Chen added.

(China Daily December 23, 2006)