China V.P. Xi Jinping Inks Deal to Buy American Cotton

Chinese Vice President Xi Jinping toured the Port of Los Angeles, held business meetings at the JW Marriott Hotel in downtown Los Angeles, toured Walt Disney Concert Hall and even attended part of a Lakers basketball game during his whirlwind tour to Southern California.

All that was well-publicized, but not many media outlets reported that several important contracts with U.S. cotton companies were inked on Feb. 17 while the vice president was in Los Angeles.

China is the world’s largest cotton importer, which would seem only rational because the country is basically the garment factory to the world.

When Xi and his entourage passed through Memphis, Tenn., on Feb. 16, they combined business with diplomacy. The group struck up a deal for nine U.S. cotton contracts, totaling $500 million, that were signed while the Chinese were in Los Angeles.

The contracts will send Chinese mills 220,000 tons of cotton supplied by, among others, Allensberg Cotton and Cargill Cotton of Memphis and Staplcotn of Greenwood, Miss., according to the Commercial Appeal in Memphis.  

It has been reported that China is stockpiling cotton now that prices have come down to around 86 cents a pounds after soaring to as much as $2.30 a pound last year.

The theory is that cotton prices might go up later this year and China’s competitors in other countries will be forced to buy cotton at a higher price. That gives Chinese factories, with cheaper cotton supplies, a price advantage over their foreign competitors.

And it was all facilitated with the swipe of a pen in Los Angeles.—Deborah Belgum