Subsidized Bank Loans for Xinjiang Cotton

Statistics from the Agricultural Development Bank of China (ADBC) as of Dec. 20, 2008 show that loans for purchases of cotton in Xinjiang Autonomous Region totaled 28 billion yuan (over $4.1 billion) to preserve profits for 1 million cotton producers in that region.

New cotton procurement in Xinjiang totaled 2.1 million metric tons. According to provincial agriculture department, 2008 sown area of cotton was 24.338 million mu (1.62 million hectares) and production was 2.8 million metric tons, down about 100,000 mt from 2007.

Because purchasing cotton is too risky, the Agricultural Bank of China (a commercial bank) and rural credit cooperatives have withdrawn from lending, leaving the state-run ADBC policy bank as the main source of funds. Given the lack of commercial bank funds, many privately-owned cotton enterprises have gone to the ADBC life line for loans. This financial support keeps farmers profitable.

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Dim Sums: Agricultural Markets in China

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