Textile export to face challenge in H2
The China National Textile and Apparel Council said that, since 2019, due to the weakening of the international economy and the rising risk and an unstable trade environment, the export pressure of the textile industry has increased significantly from the same period last year.
Accordingly, more adjustments are being made to the product and market structure. It will be increasingly difficult for the textile industry to maintain positive export growth in the second half of the year.
According to China Customs, in the first half of the year, China's textile and apparel exports amounted to $128.4 billion, a decrease of 2 percent year-on-year. Upstream chemical fiber, yarn and fabrics have become the main driving force behind exports.
In the first half of the year, China's textile exports increased by 1 percent year-on-year, accounting for 48.2 percent of China’s total export value, an increase of 4.1 percent over 2018. The export of garments decreased by 4.7 percent year-on-year.
Exports to emerging markets fared better than traditional markets. In the first half of the year, China’s exports of textiles and garments to the United States, the European Union and Japan decreased by 0.7 percent, 4.2 percent and 4.7 percent respectively, while exports to ASEAN, Mexico and Africa increased by 0.8 percent, 3.9 percent and 5.2 percent respectively.
The macro-environmental complexity and uncertainty faced by China's textile industry will continue this year.
In the second half of the year, due to factors such as rising uncertainty in the trade environment and the weakening of US economic growth, global economic growth and market demand are expected to slow down. Sino-US trade relations remain uncertain and it is possible that the trade war will worsen. Although it only affects exports to the American market, the deterioration of the trade environment will affect market confidence, making the export situation of the textile industry more severe.
The external pressures on the textile industry will become more complicated in the second half of the year. China's macroeconomic environment and domestic demand consumer market will still serve as the primary source of development support for the industry.
Textiles have always been an important economic pillar of China. However, it is worth serious considering both intrinsic quality and the outside market.
China experiences low prices on textile exports largely due to inconsistent quality and poor functionality. Chinese textile products are easily affected by foreign economic conditions due to a lack of technical talents and capital. Foreign demand for bulk products are insufficient and prices are falling.
Due to the high labor costs of the domestic textile industry when compared to Southeast Asia, orders of China's textiles have decreased significantly. Many of the overseas orders have been taken over by firms in Southeast Asia. Many SMEs are facing increased inventory, decreased orders and falling prices.
The loss of orders has adverse effect on Chinese textile producers. In order to restore order and maintain normal operations, some small and medium-sized enterprises will be forced to further reduce their profit margins. In addition, Sino-US trade friction has added uncertainty to the Chinese textile and garment industry.