At the beginning of 2021, China's foreign trade exports got off to a flying start, realizing rapid growth on the basis of a low base of the beginning of 2020. In the first two months of 2021, the exports of textile and apparel achieved high-speed growth, surged by more than 50% year-on-year, indicating that China's textile and apparel sector has fully recovered. However, due to uncertainties about the recovery in global consumer demand, as well as the export of anti-epidemic materials that played a major role in driving growth in the early stage has gradually fallen, high-speed growth of the exports of the textile and apparel sector will not last for a long time. Therefore, it is expected that exports will maintain normal growth in the second quarter of this year.

The increase in the price of raw materials cast a blight on the production layout of enterprises. Since the beginning of the year, the prices of textile raw materials have risen rapidly. After the Spring Festival, the price maintained a high level, and that for both domestic and foreign prices rose at the same time. For example, in February, the average domestic price of cotton increased by 18% year-on-year and 3.6% month-on-month respectively, and the average price of imported cotton rose by 20.8%year-on-year and 6.2% month-on-month respectively. The growth rates of chemical fibers were also high. Thereinto, the average growth rate of viscose, polyester fiber and spandex reached more than 30% at the beginning of the year. The soaring price of raw materials has led to further squeezing of corporate profits, having an adverse effect on the production and export orders.

1. Export volume exceeded the level of the same period in 2019

China's textile and apparel exports showed significant growth in February. Driven by a low base, market demand recovery, and policies about staying put during the Spring Festival, the export in that month achieved huge growth. The monthly growth rate of textiles, apparel, and apparel reached three times compared with the same period of last year.

2. The United States has become China's largest export destination for textiles

After the Brexit, the United States gradually surpassed the European Union (27 countries) to become China's largest export destination for textiles and apparel. From January to February 2021, China's exports to the top four export destinations, i.e., the United States, the European Union, ASEAN, and Japan, reached US$ 8.51 billion, US$ 7.57 billion, US$ 6.71 billion, and US$ 3.5 billion, respectively, surged by 85.6%, 57.1%, 65.7% and 51.8%. Among them, both apparel exports to Europe, and the United States, and exports of yarn and fabrics to ASEAN and Japan saw recovered growth, exceeding the level of the same period in 2019.

With the further control of the global pandemic, the procurement strategies of the three major markets, i.e., Europe, America and Japan, have gradually returned to normal. And the market share of China's products has fallen from a high level. In December 2020, China's textile and apparel market accounted for 34.7% of the EU market, seeing a drop of 32.6 percentage points from the high point in May of that year. In January 2021, China's textiles and apparel share in the United States market was 32.9%, down 27.5 percentage points from the high point. And China's textiles and apparel share in the Japanese market accounted for 58%, down by 16 percentage points from the high point.

3. Bulk commodity exports achieved recovery growth

Driven by the demand of the anti-epidemic materials, from January to February this year, textile and apparel exports achieved a recovery growth of 60.3% and 49.8% year-on-year, respectively. The export growth rate of traditional bulk commodity like yarns, fabrics, finished products and knitted garments reached 27.4%, 38.2%, 99% and 39.5% respectively.

According to China Customs HS 6-digit statistics, the export value of surgical masks and medical protective clothing as the main anti-epidemic materials reached a peak in May 2020 and then fell month by month, but the export scale was still at a relatively high level. In February, the export of surgical masks and medical protective clothing totaled US$ 5.54 billion, accounting for 11.7% of the total export.

4. The growth rate of textile and apparel exports in central and western China ranked among the top

From January to February, the exports of China's provinces all achieved growth, except for Tibet Autonomous Region and Xinjiang Uygur Autonomous Region, of which the increase of 20 provinces (municipalities, autonomous regions) reached more than 50%. The central and western regions had outstanding performance. The export growth rates of Hubei Province, Guangxi Province, Jiangxi Province, Anhui Province, Yunnan Province, etc., doubled in the first two months.

5. Apparel imports promoted the overall imports

The imports of textile and apparel experienced a recovery growth. From January to February, the cumulative import value of textiles and apparel increased by 8.2% year-on-year, mainly driven by apparel growth. The cumulative increase in apparel import was 50.4%, of which knitted and woven apparel up by 37.8%. And the import of intermediate products has not yet resumed growth. The overall import of textiles fell by 13.8%, of which yarns increased by 24.6% because of price increases, fabrics fell by 1.7%, and manufactured products plummeted by 50.7%.

6. Cotton imports grew rapidly and continually

Since the beginning of 2021, cotton imports maintained the growth from the end of last year. In the first two months, China imported 690,000 tons of cotton, surged by 67.5% year-on-year. The United States is the largest cotton exporter for China, with a total of 298,000 tons of cotton imported from the United States, seeing an increase of more than three times. And the proportion of US cotton is as high as 43% of the total.

The China Cotton Association analyzed that driven by factors such as improved control of the epidemic, as well as increased commodity price, domestic and foreign cotton prices have hit new annual highs. Many Chinese people opted to stay put during the Spring Festival holiday this year in response to the government's call to avoid unnecessary gatherings as part of anti-epidemic measures. The textile sector resumed work and production ahead of schedule, the demand and consumption of the textile industry were turning for the better, and domestic cotton prices continued to rise.

Source: CHINA TEXTILE LEADER Express