China National Cotton Exchange (CNCE) was founded in 1998 by China government, it's a non-profit service organization. The headquarter of the CNCE is located in Beijing and there are permanent workstations operated as the branch organizations in 22 cotton producing and consuming regions. The CNCE follows the principles of openness, fairness, impartiality and honesty and carries out the function of Organizing Trade, Discovering Price, Avoiding Risk and Transferring Information. The CNCE provides the service of trading settlement, physical delivery, quality inspection, storage and logistics, information, consultation and Human Resource training, etc.

 

The CNCE adopts the membership system and traders system. The cotton firms, textile mills and Import & Export Companies that registered with the administration of industry and commerce, acted as the independent corporation can apply to become a member dealer or trader of the CNCE. The members and traders of the CNCE have exceeded 500 by the end of 2005.

 

The CNCE was operated since October 1999 and started the selling auction of the state reserve cotton since December 1999, and the buying auction was started since August 2004 entrusted by the government. The CNCE has contributed to the state macro-control by selling out over 3.5 million tons and buying about 400,000 tonnes for state reserve cotton by the end of  2005.

 

The CNCE launched the forward e-trading in December 2002. By end of  2005, the e-trading for commercial cotton has made a total deal of over 4 million tons and a total cotton delivery of over 300,000 tons. The cotton stocked in the appointed warehouses of the CNCE has exceeded over 700,000 tons and there are over 60 designated delivery warehouses. In addition, the CNCE collected over 2 billion RMB for more than 100 traders through the Warehouse Receipt Mortgage. With its regularized trade, convenient delivery, ensured quality and performance, fund safety, and capability of avoiding price fluctuation risks, the forward e-trading has drawn concerns and active participation of more and more cotton-related enterprises. Leader of related central government emphasize that CNCE should exert it's function further and perfect cotton market system in phase. The Forward E-trading also gained high appraise from the international cotton industry.

 

Nowadays, the E-trading has become a "barometer", reflecting the development of spot price and has an impact on the international cotton price. The cotton business net and trading system covering the whole country on the basis of the Internet technology is basically formed.

 

On the current experiences, the CNCE will explore more trading resources through the cooperation with the related sectors, assist the related banks to supervise the cotton under the loan program and manage the storage with the entrust of the leading group of the National Cotton Quality Inspection System Reform.

 

To set up the largest and most modern cotton business center and information releasing center and logistics center. The CNCE will strengthen the management of financing, warehousing and risk controlling to improve the standard trading of the commercial cotton as well as continue to fulfill the policy cotton trading. On that basis, the CNCE will gradually establish an international electronic platform to attract international merchants, improve the competition and influence of the CNCE, as well as make more contribution to guide domestic cotton production, marketing and consuming.