The Substitution Elasticity of Cotton Imports between China and the United States——Based on the Armington Model

Jin Cheng

doi:10.54097/xmy1dh71

Authors

Jin Cheng

DOI:

https://doi.org/10.54097/xmy1dh71

Keywords:

Cotton trade, Import dependence, Armington substitution elasticity.

Abstract

As the world's largest cotton importer, China's import dependence and trade policy adjustments significantly impact domestic agricultural security and the development of the textile industry. Based on the Armington model, this study uses cotton trade data between China and the United States from 1998 to 2023 to estimate the substitution elasticity of cotton between the two countries and analyze import dependence. The results show that the long-term substitution elasticity of China-U.S. cotton is 1.89, indicating that price fluctuations significantly affect import demand, with a high degree of homogeneity between the two. The short-term elasticity is -0.35, reflecting that short-term import adjustments are constrained by policies and contracts, resulting in a higher level of dependence. Policy recommendations include diversifying import channels, optimizing reserve mechanisms, and improving cotton farmers' welfare to reduce external risks and ensure the stability of the domestic cotton supply chain.

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