Abstract: Guaranteeing farmers’ income is an important target of China’s reform on the subsidy policy of the target price of cotton, which has been piloted in Xinjiang since April, 2014. Taking the subsidy policy as a natural experiment, the paper uses synthetic control method of policy evaluation to compare the differences between the actual and “counterfactual” value of cotton farmers’ income before and after the policy implementation and to evaluate the impact of the subsidy policy on cotton farmers’ income after the abolition of the storage policy. The study found that the target price subsidy prevented the decline of cotton farmers’ income after the storage policy abolition, and with the continuation and optimization of the subsidy policy, cotton farmers’ income maintained a steady increase, indicating an important role of the target price subsidy policy in ensuring cotton farmers’ income. It is essential that the government should further consolidate the target price subsidy policy in Xinjiang so as to retain farmers’ confidence in cotton planting and their income expectation. The policy can be extended to other advantageous cotton-producing areas in due time. Meanwhile, it is necessary to spread agricultural technologies and new cotton varieties with support, and encourage cotton farmers to raise their income by improving productivity.

Key words: target price subsidy policy, cotton, farmers’ income, synthetic control method, counter-factual