China is emerging as an agribusiness giant. Domestic reforms and the readmission of China to GATT will integrate rapidly the massive Chinese agribusiness sector into international markets. China has already become a dominant player in world wool markets. Developments in relation to wool, therefore, are a harbinger of what is likely to happen in regard to many other agribusiness commodities. This book, published in collaboration with the Australian Centre for International Agricultural Research (ACIAR), provides a detailed analysis of how the Chinese are reforming their wool marketing system. Wool is grown mainly by people of minority nationalities who are among the poorest in China and who live in the environmentally fragile pastoral region. As a result, wool markets have an impact on social, environmental and developmental issues as well as being of major relevance to China’s strategic and trade interests. This book, therefore, is concerned with many of the most difficult issues confronting Chinese society and its interaction with the world community. By examining these aspects of contemporary China through the case of wool, the authors provide first hand insights into the detailed impact of the economic reform process on particular social groups and institutions. Most of the earlier literature on economic reforms in China has concentrated on general economic reforms and sector-wide or industry-wide effects.
| List of Tables | ||
| List of Figures | ||
| Foreword | ||
| Acknowledgements | ||
| About the Authors | ||
| Glossary | ||
| 1 | Soft Gold | 1 |
| 1.1 | China Through the "Wool Window" | 2 |
| 1.2 | Scope of the Book | 4 |
| 1.3 | Sources of Information | 6 |
| 1.4 | Organisation of the Book | 7 |
| 2 | Sheep's Side to Consumer's Back | 9 |
| 2.1 | Agribusiness Environment for Wool and Key Institutions | 9 |
| 2.2 | Wool Production in China | 14 |
| 2.3 | Wool Processing in China | 21 |
| 3 | A Woolly Story | 32 |
| 3.1 | Nomadism to Communes (1949 to 1978) | 32 |
| 3.2 | Economic Reforms (1979 to 1984) | 34 |
| 3.3 | Wool-Marketing Reforms (1985) | 35 |
| 3.4 | "Wool Wars" (1985 to 1988) | 36 |
| 3.5 | Temporary Reinstatement of SMC Control (1989 to 1991) | 38 |
| 3.6 | Open Markets (from 1992) | 39 |
| 4 | Setting Standards | 40 |
| 4.1 | Outline of Current Raw Wool and Top Standards | 40 |
| 4.2 | Old National Wool Grading Standard | 41 |
| 4.3 | New Raw-Wool Purchasing Standard | 44 |
| 4.4 | Industrial Wool-Sorts Standard | 48 |
| 4.5 | Compatibility of the Old National Wool Grading Standard with the Industrial Wool-Sorts Standard | 49 |
| 4.6 | Wool Top Standard | 54 |
| 5 | A Fair Price? | 56 |
| 5.1 | Impact of Deregulating the Wool Market on Price-Related Distortions | 57 |
| 5.2 | "Open" Markets versus "Free" Markets | 70 |
| 5.3 | Changing Roles for the Price-Setting Institutions | 73 |
| 6 | Testing Times | 76 |
| 6.1 | Overview of Fibre Inspection and Testing | 76 |
| 6.2 | Fibre Inspection Institutions | 78 |
| 6.3 | Problems in Wool Grading and Fibre Inspection | 81 |
| 6.4 | Quality Control and Fibre Inspection Regulations | 87 |
| 6.5 | Selling Wool on a Clean-Wool and Industrial-Grade Basis | 88 |
| 6.6 | Fibre Research | 92 |
| 7 | An Agribusiness Giant Awakes | 96 |
| 7.1 | SMC Status | 96 |
| 7.2 | SMC Structure and Role | 99 |
| 7.3 | Administrative and Non-Marketing Role of SMCs | 106 |
| 7.4 | Breaking the SMC Monopoly | 107 |
| 8 | Auctioning the Lot | 115 |
| 8.1 | Evolution of Wool Auctions | 115 |
| 8.2 | Wool Auction Standard and Rules | 117 |
| 8.3 | Analysis of Auction Data | 122 |
| 8.4 | Is There a Future for Chinese Wool Auctions? | 129 |
| 9 | Local Scours or Local Scourges? | 138 |
| 9.1 | Development of Local Wool Processing | 138 |
| 9.2 | Adverse Effects of Rapid Expansion in Local Wool-Processing Capacity | 141 |
| 9.3 | Likely Impact of New Selling Arrangements | 142 |
| 10 | Problems Processing | 148 |
| 10.1 | State of Wool Processing in the Early 1990s | 149 |
| 10.2 | Domestic Marketing Arrangements and Wool Quality | 150 |
| 10.3 | Other Factors Affecting Mill Profitability | 153 |
| 11 | Trading Places | 159 |
| 11.1 | Background | 160 |
| 11.2 | Reforming Importing Arrangements | 167 |
| 11.3 | Up-Country Mills and Importing Wool | 172 |
| 11.4 | Importing Channels and Information Flows | 175 |
| 12 | Lessons for the Future | 179 |
| 12.1 | A Mega-Agribusiness Sector is Emerging in China | 179 |
| 12.2 | Wool is Becoming More Important for China | 180 |
| 12.3 | China is Becoming More Important for Wool | 181 |
| 12.4 | Things Are Not Always What They Seem | 182 |
| 12.5 | Final Statement | 185 |
| App. A The (Old) National Wool Grading Standard | 189 | |
| App. B The (New) National Wool Grading Standard of the People's Republic of China | 199 | |
| App. C The Industrial Wool-Sorts Standard | 206 | |
| App. D The (Old) Top Standard of Domestic Fine Wool, Improved Fine Wool and Native Wool | 211 | |
| App. E The (New) National Top Standard of Domestic and Imported Wool in China | 217 | |
| App. F Wool Quality Control Regulation for the Inner Mongolia Autonomous Region | 223 | |
| App. G National Wool Quality Control Regulation - Control and Management of Wool Quality | 226 | |
| App. H Quality Standard of Auctioned Wool | 228 | |
| References | 251 | |
| Index | 254 |
Overview
China is emerging as an agribusiness giant. Domestic reforms and the readmission of China to GATT will integrate rapidly the massive Chinese agribusiness sector into international markets. China has already become a dominant player in world wool markets. Developments in relation to wool, therefore, are a harbinger of what is likely to happen in regard to many other agribusiness commodities. This book, published in collaboration with the Australian Centre for International Agricultural Research (ACIAR), provides a...