Since the beginning of this year, China’s textile industry faces a more complex and severe international environment and more urgent tasks for high-quality development under the new situation. Guided by the strategic objectives of high-quality development and building a modern industrial system, China’s textile industry adheres to promoting the industrial transformation towards high-end, intelligent, and sustainable development. As China’s economic and social development resumed normal operation, the textile industry saw recovered domestic sales and a smoother industrial cycle. However, the sluggish external demand, complex trade environment and high production cost heap pressure on the main operating indicators of the textile industry in the first half; the pressure on exports has increased significantly.

Looking forward to this year, the development of the textile industry remains complex and grim. The world economic recovery still lacks momentum; the contracted external demand, intensified competition in the international market, high production and operation pressures and other risk factors threaten the foundation of stable performance of the textile industry.

Business Climate & Production Performance

In the first half of this year, supported by the continually improved domestic market situation and the national macro-policies, comprehensive indicators of the prosperity of China’s textile industry maintain a rebound trend; enterprise expectations are improved gradually. According to the China National Textile and Apparel Council, the prosperity index of China’s textile industry in the second quarter is about to reach 57%, 10.7 and 1.4 percentage points higher than the same period last year and the first quarter of this year, respectively.

Affected by the sluggish external demand, the production performance of the textile industry has been slightly fluctuating, but its decline rate gradually narrowed. According to the National Bureau of Statistics, the capacity utilization rate of the textile industry and chemical fiber industry reached 76.2% and 83.2% in the first half, 1.8 and 0.8 percentage points lower than the same period of last year respectively, but they are higher than that of the manufacturing industry (74.7%). In the first half of the year, the industrial added value of textile enterprises above the designated size decreased by 3% year-on-year, 0.7 percentage points higher than the first quarter of this year. While the industrial added value of chemical fibers, cotton textiles, filament weaving and other sub-sectors achieved positive growth.

Domestic Sales & Export

Since the beginning of this year, production recovered in an orderly manner. The ever-growing consumption scene and the implementation of policies related to consumption promotion drive the domestic demand for textiles and clothing to better growth.

According to the National Bureau of Statistics, in the first half of the year, the retail sales of clothing, foot & head wear and knitted goods above the designated size increased by 12.8% year-on-year, maintaining double-digit growth since April this year. Driven by live broadcasting and short videos and other new modes, online retail channels showed positive growth. In the online retail sales of physical commodities, wearing goods increased by 13.3% year-on-year, 10.9 percentage points higher than that of the same period in 2022.

Affected by the weak overseas demand, and the complex international trade environment, China’s textile industry faced increased pressure on exports since the beginning of this year. But some export destinations still presented good resilience. According to the data released by the General Administration of Customs, China’s textile and apparel exports totaled US$ 142.68 billion in the first half of this year, seeing a year-on-year decline of 8.8%. Among them, textile exports were US$ 67.7 billion, seeing a year-on-year decline of 10.9%; apparel exports reached US$ 74.98 billion, dropping by 5.9% year-on-year. As for the main export destinations, China’s textile and apparel exports to the United States, the European Union, and Japan all saw a year-on-year decline; while that to South Korea, Australia, Russia, Central Asian Countries and the countries along the Belt and Road Initiative achieved positive growth.

Benefit & Investment

Since the beginning of this year, the textile industry benefits have declined under the downturn in external demand and high production costs. But with the help of rebounded domestic sales and the support of national policies, the decrease rate of the industry’s benefits narrowed month by month; the pressure on production and operation has been eased than that of the first quarter. According to the National Bureau of Statistics, the profitability of most sub-sectors improved over the quarter. Among these, total profits of woolen textiles, silk, home textiles and the textile machinery industry achieved positive growth.

Under increased pressure on production and operation, the textile enterprises were lack of investment confidence, and the scale of investment shrunk. The investment in fixed assets of the textile industry, apparel industry, and chemical fiber industry decreased by 2%, 5.3%, and 7% year-on-year, respectively in the first half of 2023.

Source: CHINA TEXTILE LEADER Express