In the first half of 2020, facing the severe test brought by the COVID-19 pandemic and the complex and changeable domestic and foreign environment, China's economy took a roller-coaster ride. In the second quarter, economic growth turned from negative to positive, and economic operations showed a steady recovery. In the face of the coronavirus, China's technical textile industry has made every effort to ensure the production of surgical masks, medical protective clothing, disinfection wipes, and related raw and auxiliary materials, making important contributions to winning the staged victory in the fight against the pandemic and driving the whole operation of the textile industry.

Data from the National Bureau of Statistics show that in the first five months of this year, the industrial value-added of technical textile enterprises above designated size (with annual turnover more than CNY 20 million) surged by 50% year-on-year. The prosperity index of the technical textiles industry reached 73.0, which was in a relatively high range.

I. Production and investment of main products grew steadily

According to the China Nonwovens & Industrial Textiles Association (CNITA), the domestic market demand index of the technical textile industry in the first half of the year was 63.5, and the overseas market demand index was 43.8. The epidemic has a greater impact on demand in overseas markets. Among the interviewed enterprises, for domestic market demand, 59.4% of enterprises said growth trend; 15.2% thought it maintained stable, 25.4% said there was a decline in varying degrees; and for overseas market demand, 30.2% said growth, 19.0% of the companies said that the change was not obvious, and more than half of the companies believed that there was a shrinkage of varying degrees.

In the first half of 2020, anti-epidemic materials and related raw and auxiliary materials became the main growth point of the industry's market demand. The association's survey showed that the production index of the technical textile industry in the first half of 2020 reached 62.7, which was relatively high.

According to the National Bureau of Statistics, the output of nonwovens by enterprises above designated size reached about 2.03 million tons in January-May of 2020, up 2.46% year-on-year. While the domestic situation has stabilized, the output of nonwovens has gradually returned to normal growth. From January to May, China exported 412,000 tons of nonwovens, edged up 0.78% year-on-year; the imports of nonwovens reached 66,000 tons, increased by 30.38% year-on-year.

In terms of fixed-assets investment, according to the association's survey, 66.52% of the interviewed companies indicated that they have new project investment plans in 2020. Affected by the coronavirus, 42.95% of companies with investment plans have implemented investment projects in the first half of the year, 28.86% of companies will implement investment projects in the second half of the year, and 25.5% of companies said that the project will be postponed, depending on the impact of the epidemic. Only one company said it had cancelled its investment plan.

II. Economic benefits showed greater differentiation

According to the National Bureau of Statistics, from January to May 2020, the total operating income and total profits of enterprises above designated size in the technical textile industry were CNY 103.92 billion and CNY 12.69 billion, respectively, seeing year-on-year growth of 13.25% and 189.08%. The industry's profit rate was 12.21%, up 7.43 percentage points year-on-year. And the industry's gross profit rate was 21.47%, up 7.64 percentage points compared with the same period last year.

However, it is worthwhile to note that 18.06% of enterprises operated in red in the first half of 2020, and their deficit increased by 7.31% compared to the same period of 2019. Although the production of anti-epidemic materials has boosted the overall efficiency of the industry, businesses outside the anti-epidemic materials industry were still greatly affected in their operations. The survey results of the association also confirmed this point. The industry's income index in the first half of the year was 65.6 and the profit index was 61.2. Among them, the income index and profit index of medical & hygienic textiles and nonwoven rolls companies were 72.0 and 69.5, respectively, but that of other fields were only 51.2 and 51.7. From the perspective of the prosperity index, the prosperity index of the medical & hygienic textiles, protective and safety textiles, filtration & separation textiles, nonwoven rolls, equipment and accessories was relatively high. Among them, that of the medical & hygienic textiles related to pandemic prevention reached 85.9; while the prosperity index of twine & rope (cable), ribbon, lining cloth were relatively low, among which the prosperity index of the padding cloth was below the threshold (50).

Figure: Prosperity Index of Sample Corporate for the First Half of 2020

Source: China Nonwovens & Industrial Textiles Association (CNITA)

 

By sectors, as an important raw material for anti-epidemic materials, nonwovens-related enterprises actively resumed work and production since February. From January to May, the operating income of nonwovens enterprises above designated size achieved CNY 56.25 billion, their total profits were CNY 9.39 billion. The profit margin was 12.21%, up 7.43 percentage points year-on-year. While the production and operation of areas that are not highly related to the production of anti-epidemic materials have declined to vary degrees. The operating income of twine & rope (cable), ribbon decreased by 1.41% year-on-year, and its total profit increased by 2.67% year-on-year; the operating revenues of textile belts, cord fabrics, and awnings declined by 20.45% and 13.69% year-on-year respectively, their total profits dropped by 47.47% and 13.86% year-on-year.

III. Anti-pandemic supplies have driven a substantial increase in exports

According to the China General Administration for Customs, from January to May 2020, China's technical textile industry exported US$ 34.29 billion worth of commodities, ballooned by 202.62% year-on-year. Among the main export products, the export value of surgical masks reached US$ 22.56 billion; nonwoven protective clothing, US$ 2.06 billion, which accounts for 65.78% and 6% of the total exports, respectively. The exports of nonwovens and technical glassfiber products increased by 7.19% and 0.60% respectively. While that of technical coated fabrics, awnings, diapers and sanitary napkins, as well as twine & rope (cable), and ribbon decreased by 18.67%, 18.62%, 5.11%, and 3.05% respectively. In terms of imports, the import value of surgical masks and nonwovens protective clothing reached US$ 840 million and US$ 330 million, respectively.

In terms of major export markets, due to the severe pandemic situation in many European countries, China's exports of technical textiles to the EU reached US$ 10.45 billion from January to May, becoming the first export destination of China's technical textile industry. Among various export products, surgical masks and medical protective clothing accounted for 87.32%. Meanwhile, China's exports of technical textiles to the United States were US$ 6.83 billion, of which masks and medical protective clothing accounted for 80.74%. And China's exports of technical textiles to countries along the "Belt and Road" initiative reached US$ 8.65 billion, skyrocketed by 100.56% year-on-year.

IV. Summary and outlook

In the first half of 2020, the production, sales, investment and foreign trade of China's technical textiles industry have maintained a relatively high growth rate. However, the government and the industry insiders should take an objective view of the rapid growth in the first half of the year, closely focus on the impact of future pandemic situation, make rational investment, and be prepared for the future normal development.

Currently, the pandemic situation in China has been fundamentally improved, economic and social operations have gradually returned to normal. And the domestic market demand for technical textiles unrelated to anti-epidemic materials will be restored in the second half of 2020. However, due to the severe global situation, the overseas demand for that kind of materials will continue to decline, but its decline will slow down. According to the research of the association, in the second half of 2020, the domestic market demand index of the technical textile industry was 62.8, and the overseas market demand index was 48.9. It is expected that the main economic indicators of China's technical textile industry will continue to maintain a relatively high growth rate, and the industry's production, sales, and exports will tend to back to normal. The differentiation between anti-epidemic materials and other products will be narrowed, and the industry as a whole will be in a relatively stable state of development.