New economic policies in China have had a tremendous impact on the domestic cotton market. In October 1992, the government enacted legislation to encourage a transtion to a market economy. One consequence of this legislation is the decentralization of the cotton market by shifting the buying and selling decisions from cantral to regional control. To ensure an overall supply and demand balance, the central government controls the amount of cotton exported. Individual provinces, however, till control when their cottons are sold in domestic or international markets. Because China is the largest cotton producing country in the world, such economic changes may have tremendous impacts on international cotton markets.