Encyclopedia of India–China Cultural Contacts v1.c5.s3.t2: India-China Cotton Yarn Trade
Encyclopedia of India–China Cultural Contacts v1.c5.s3.t2
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India-China Cotton Yarn Trade
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Manufactured cotton yarn was one of the main exports from India to China in the last quarter of the 19th century CE and the early years of the 20th century CE. The earliest Indian textile mills which were established in the 1850s initially produced cloth for the domestic market but they soon found that they could not compete with imported British cloth. Therefore, from the 1870s, Indian textile entrepreneurs, many of whom already had experience of trading with China in commodities like raw cotton and opium, turned to the China market where there was a demand for cotton yarn. Although China had been importing manufactured cotton yarn almost entirely from Britain until that point, there developed a preference for the coarse type of yarn produced by the Indian mills in the Chinese handloom industry.
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Cotton weaving factory of Yihe opened up in Shanghai in 1895
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From an average of just 2,000 bales of cotton yarn per year in the period 1875-79, by 1895-99 the Chinese market imported an average of 452,000 bales of yarn from India per year. The market share of Indian mills rose to 96 per cent, compared to that of Britain which dropped to four per cent. Of the total exports of cotton yarn from the mills of Bombay, the exports to China exceeded 92 per cent for the entire period from the 1870s to the first decade of the 20th century CE. This shows that the trade with China played a very important role in stabilising the Indian textile industry in its early decades of growth. Among the well-known mills of Bombay that supplied the China market were the China Mills, Moon Mills Jacob Sassoon Mills, and Tata’s Swadeshi Mills.
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Cotton yarn spindle
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From the turn of the 20th century CE, however, Indian cotton yarn exports to China began to decline mainly on account of competition from Japanese yarn which was cheaper. In 1906, India still supplied 77 per cent of Chinese yarn imports but a decade later, Japanese yarn exports had overtaken India’s exports. By 1924, the Indian share of the Chinese cotton yarn market had fallen to 24 per cent. By this time, Chinese production of manufactured cotton yarn had also begun to displace both Indian and Japanese imports. The decline in yarn exports to China almost immediately affected the textile industry in India with several mills in Bombay having to close down fully or partially. However, in the long term, it was one of the factors that led to the industry in India reorienting itself to produce cloth for the domestic market again, instead of focussing on producing yarn for export.