IDA Universal

September/October 2016

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I DA U N I V E R S A L S e p te m b e r - O c to b e r 2 0 1 6 49 for infrastructure that has defi ned China's emergence as an economic power in recent years. Instead, Chinese consumers and technology companies are playing a bigger role in the economy, but not always in ways that help U.S. suppliers. At the same time, China is supplying much more of its own needs overall with domestic production of pork, cotton, coal and semicon- ductors for phones and other electronic gadgets, sometimes produced in China by American fi rms. Meanwhile, a strong dollar has made American suppliers less competitive, American exporters are suff ering because Chinese consumers and technology companies are playing a bigger role in the economy in ways that don't always help American suppliers. Photo: Nick Ut/Associated Press compared with those from other countries. A growing list of American industries and farm groups is looking for customers outside China to make up for the drop. High on the list is the U.S. cotton industry. After spikes in cotton prices hurt its textiles-and- apparel industry in 2010 and 2011, China's government began buying millions of bales of the fi ber, building stockpiles that appeared to violate World Trade Organiza- tion principles, according to U.S. offi cials. Then, in 2014, China's government stopped buying cotton and started selling the stockpiles to domestic spinners, according to trade group Cotton Inc. "Now they're relying more on domestic supplies, whatever they grow plus what they had stored up," said Jon Devine, senior economist at Cotton Inc. in Cary, N.C. American cotton growers sent just 2.65 million bales to China in the last harvest year, compared with 6.43 million bales in the 2011-2012 season, according to the group. China has also diversi- fi ed its sources for coal, among other commodities, tapping countries such as Australia, as well as its own domestic supply, which fuels its growing power needs and provides coke for the steelmaking process. The shift comes as China's own appetite for steel wanes, resulting in heavy exports from the country that have depressed world prices. For the U.S., that lower steel demand means American coal exports to China dropped to 208,000 metric tons last year, compared with 9.1 million metric tons in 2012, according to the International Energy Agency. American iron ore mines used to be a small, but signifi cant, supplier to China, but this year, exports have dropped to zero. ● www.wsj.com/articles 7/16

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