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Economic Operation of China’s Textile Industry in the First Three Quarters

2023/11/27

Backed by a range of national policy initiatives that aim to expand domestic demand, boost confidence, and mitigate risks, as well as rising domestic demand, the economic performance of China’s textile industry has continued to improve in the first three quarters. Although production, efficiency, investment, and other key indicators have not completely reversed the previous negative growth, the rate of decline has progressively slowed down. This is a positive sign that the foundation for economic recovery has been strengthened and the prospects for high-quality development have improved. In the upcoming fourth quarter and 2024, the textile industry is still expected to encounter a challenging development environment.

Industry Prosperity and Production
Faced with the complex impact of the external environment, the production and marketing of China’s textile industry have been under greater pressure since the beginning of this year. However, the expectations and confidence of textile enterprises steadily improved under the support of a range of national policy initiatives.

According to a survey released by the China National Textile and Apparel Council, the prosperity index of China’s textile industry reached 55.9% in the third quarter of this year, seeing a 1.1 percentage points decline compared with the second quarter but an 11.6 percentage points surge than the same period last year, which hits the higher level since 2022. Among them, the domestic and foreign new orders index, and sales price index have rebounded to the highest level in a year.

Insufficient demand dragged down the production scale of the textile industry this year, but the capacity utilization rate rose quarter by quarter, leading to a steady recovery in multisector. The latest statistics from the National Bureau of Statistics revealed that the capacity utilization rate of the textile industry and chemical fiber industry reached 76.4% and 83.8% in the first three quarters, higher than that of the national industry (74.8%). In the first three quarters, the industrial added value of the textile enterprises above the designated size decreased by 2.2% year-on-year, narrowing by 1.5 and 0.8 percentage points than that of the first quarter and the first half of this year. The production decline in most sectors of the industrial chain has narrowed month by month. Thereinto, the industrial added value of the chemical fiber and filament weaving industry grew by 8%; the cumulative growth rate of the cotton textile industry has achieved a positive growth since June. But the knitting, apparel, home textiles, technical textiles and other downstream industries are still under pressure in the first three quarters.

Domestic Sales and Export

According to the National Bureau of Statistics, the retail sales of apparel, foot & head wear and knitted goods of major retailers above the designated size increased by 10.6% year-on-year in the first three quarters, 14.6 percentage points rebounded from the same period last year. During the Mid-Autumn Festival and National Day holidays, consumer demand for textiles and apparel saw a significant increase. Sales of major apparel retail stores in China surged by 17.5% compared to the previous year. Interesting, interactive, technological, and fashionable consumption scenes, along with new business models like live streaming and short videos, have contributed to the growth of online retail for textiles and apparel. In the first three quarters of this year, China experienced a 9.6% increase in online retail sales of wearable goods compared to the previous year, 4.9 percentage points higher than the same period in 2022.

This year, China’s textile industry is facing increased export pressure due to contracted overseas demand, high trade environment risks, and other factors. However, there are still some markets where exports have performed well. According to data from China Customs, China’s textile and apparel exports in the first three quarters of this year amounted to US$ 223.15 billion, seeing a year-on-year decrease of 10.1%. Among the main exported products, the exports of textiles, including yarns, fabrics, and manufactured products, totaled US$ 101.92 billion, down by 10.3% year-on-year; apparel exports amounted to US$ 121.23 billion, down by 8.8% year-on-year. China’s textile and apparel exports to major markets such as the United States, the European Union, Japan, and ASEAN all declined compared to the previous year. However, exports to Turkey and Russia, as well as the countries involved in the Belt and Road Initiative (BRI), experienced year-on-year growth of 6.2% and 20.1%, respectively.

Benefits and Investment
The textile industry has faced challenges this year due to low demand and high costs, which has impacted its profits. With the aid of various government policies and the usual peak season, there has been a slight improvement in market demand compared to the first half of the year. This has resulted in a narrowing of the decline in benefits quarterly. According to data from the National Bureau of Statistics, the operating income of China’s 37,000 textile enterprises above the designated size decreased by 3.3% year-on-year in the first three quarters, 4 and 1.8 percentage points narrower than the declines in the first quarter and first half of this year respectively. The total profit declined by 8.8% year-on-year, 23.6 and 12.5 percentage points narrower than the declines in the first quarter and the first half of 2023 respectively. The operating income margin has recovered to its highest level of 3%. The revenue scale of most sectors in the industrial chain has improved compared to the first half of the year, such as the chemical fiber, woolen textiles, silk, filament weaving, and knitting industries.

Under these circumstances, Chinese textile companies do not have the confidence to make investments. In the first three quarters, the fixed-asset investment for China’s textile, apparel, and chemical fiber industries decreased by 2.2%, 4.7%, and 11.6% respectively compared to the previous year, seeing slight decreases compared to the same period last year.

Resilience for High-quality Development
Looking toward the fourth quarter and the upcoming year, the future of the textile industry is filled with instability and uncertainty. To ensure a stable recovery, there are still numerous challenges to overcome. For now, the large-scale and constantly evolving domestic market serves as the primary driving force for the high-quality development of China’s textile industry. Backbone enterprises can prioritize exploration in areas such as scientific and technological innovation, brand culture, business model upgrades, resource recycling, and internationalization, providing support for the sustainable development of the textile industry.

Source: CHINA TEXTILE LEADER Express

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