In 2019, China’s textile and garment industry faces more risks Challenges: The world economy is still in a period of deep adjustment after the global financial crisis, with slow recovery and declining trade growth; global unilateralism and trade protectionism prevail, and Sino-US economic and trade frictions continue to intensify and escalate; the domestic economy faces adjustment and downward pressure. Export companies not only have to continue to endure the difficulties of rising costs, exchange rate fluctuations, and declining market demand, but also face various new challenges: the United States has imposed large-scale and high-level tariffs on our products, which has reduced our exports to the largest single external market. , its spillover effects will further accelerate industrial transfer and industrial chain adjustment, and form a negative demonstration effect, driving competitors to adopt more trade remedy measures against us.
Under multiple pressures, the performance of China’s textile and apparel industry manufacturing and foreign trade in 2019 was not satisfactory: profits and investments of production companies shrunk, and foreign trade declined. According to a report from the China Textile and Apparel Industry Federation, in 2019, the operating income of textile enterprises above designated size decreased by 1.5% compared with last year, total profits decreased by 11.6%, and the completion of fixed asset investment nationwide decreased by 5.8%. According to customs statistics, China’s textile and apparel foreign trade volume, export volume and import volume all declined again in 2019 after returning to growth in 2017~2018.
At the beginning of 2020, on the eve of the Spring Festival, just when the industry had just breathed a sigh of relief at the signing of the first-phase agreement between China and the United States and the United States reducing or canceling tariffs on some of our products, the sudden outbreak of the new coronavirus shocked the entire country. Falling into a new predicament, this unexpected disaster has even expanded to the world, causing China, which has been advocating and implementing globalization policies for many years, to face a severe test. Textile and apparel production and trade will suffer greater losses: due to the implementation of transportation, logistics and personnel movement controls in various places, the resumption of work of factories after the holidays is greatly delayed and the operating rate is insufficient; there is huge uncertainty in the supply and demand of all links in the industrial chain ; Large-scale commodity trading distribution centers have been shut down, and the market has basically been at a standstill; whether the goods on hand for foreign trade orders can be completed on time, shipped, and smoothly cleared through customs have become real problems facing enterprises. At present, the epidemic has not yet reached a clear turning point. It is expected that if it ends in the short term, that is, in mid-to-late March, it will affect production and exports in the first half of the year at most. If the delay continues, it will have long-term adverse effects in 2020 and beyond: manufacturing will further relocate abroad and foreign procurement strategies will accelerate toward substitute countries. In the current context of rising unilateralism in global trade, once this kind of external migration and adjustment is formed, it will be difficult to return. China’s textile and apparel industry’s leading edge in the industrial chain will face a major test under the new situation.
Despite the escalating risk challenges, the future of China’s textile and garment industry and foreign trade exports should not be all pessimistic. There are still many bright spots from domestic policies to the external environment: China’s economy continues to maintain the general tone of making progress while maintaining stability. , the policy focus is still on “stabilizing growth.” In 2019, the country introduced a tax reduction and fee reduction policy to reduce corporate value-added tax. In response to the COVID-19 epidemic, countries also quickly introduced relevant support and reduction policies in the short term. In response to the problem of strict and “one size fits all” environmental protection measures, Hebei Province took the lead in establishing a positive list system for ecological environment supervision to ensure the normal operation of compliant enterprises; the market is becoming increasingly diversified, and the market shares of countries along the “Belt and Road” are increasing; trade The structure and main economic entities continue to be optimized, and the leading role of general trade and private enterprises continues to increase; the endogenous driving force of textile and garment enterprises has further improved, and they have actively accelerated quality and efficiency improvements in product design and research and development, process innovation, brand building, and intelligent manufacturing. Continuously seek innovation and advancement in the field to consolidate core competitiveness. In the face of the epidemic, a large number of textile companies took active actions. While doing a good job in resuming work and protecting themselves, they allocated epidemic prevention materials to the hardest-hit areas and quickly adjusted their production lines to produce masks and protective clothing. This fully reflects the responsibility and responsibility of Chinese companies and also reflects the Chinese textile industry. The strong resilience of the garment industry; most importantly, despite the increasingly complex situation, after years of pioneering and enterprising efforts, and with the efforts of textile people across the country, the fundamentals of China’s textile and garment industry are good, and the overall advantages of manufacturing and foreign trade remain existence, the characteristics of industry structure optimization and high-quality development have gradually emerged, and the pace of moving from a large textile country to a powerful textile country remains solid.
The difficult winter will eventually pass, and the Chinese textile and garment industry, which has experienced the wind and snow, will surely usher in spring!
Number Reading Analysis of China’s Textile and Apparel Trade Situation in 2019
From January to December 2019, the textile and apparel trade volume was US$296.55 billion, a year-on-year decrease of 2.2%. Among them, exports were US$271.89 billion, down 1.9%; imports were US$24.66 billion, down 5.8%, and the cumulative trade surplus was US$247.23 billion, down 1.5%.
China’s textile and apparel trade showed the following characteristics in 2019:
The monthly export fluctuation trend in the first three quarters was obvious,
“Tail-over” at the end of the year helps rebound
In the first three quarters, affected by the uncertainty of the Sino-US economic and trade frictions, textile and apparel exports showed obvious fluctuation characteristics, and the monthly export growth and decline situation continued until August. From September to November, as the United States expanded the scope of additional tariffs to include key commodities such as clothing and household goods,�Expansion, export prices fell. The decline in clothing exports is reflected in both volume and price declines, with the quantity decline being more obvious (see the volume and price index chart for details). The total export volume of needle-woven clothing of major categories of commodities fell by 3.1%, and the export price fell by 2.1%.
Looking at the materials of yarn, fabric, and needle-woven garment export products, chemical fiber products rank first in exports, accounting for nearly half of the total, cotton products account for 30%, and wool and silk products account for about 20%. In 2019, the exports of all types of material products fell, with wool and silk products declining the most, cotton products falling 7.5%, and chemical fiber products doing relatively well, with only a slight decrease of 0.02%, basically the same.
The exports of the eastern provinces are differentiated,
The central region has achieved sustained and stable development
In 2019, the overall exports declined nationwide. Under the circumstances, Zhejiang, which ranked first in export volume, achieved growth for the third consecutive year, with an increase of 1.6%. Among the top five export provinces and cities, Fujian also achieved growth, with an increase of 6.4%, while Jiangsu, Shandong and Guangdong declined. Among them, Guangdong’s exports fell for four consecutive years, with a decline of 9% that year. By region, exports in the central region maintained sustained and stable growth, with an increase of 9.1%. Hunan, Anhui, Hubei and other places were the main regions driving growth, especially Hunan Province, where the annual export growth rate was as high as 60%.
Exports from the eastern region, western region, and the three northeastern provinces decreased by 2.2%, 7.6%, and 5.4% respectively.
Textile imports fell in both volume and price,
Clothing imports maintained growth
In 2019, the RMB exchange rate experienced “first appreciation, depreciation and then two-way fluctuations” process. It “broke 7” in early August and was close to the 7.20 mark at its weakest point. After that, the two-way fluctuation characteristics were significantly strengthened. Throughout the year, the central parity rate of RMB against the US dollar has depreciated by a cumulative 1,130 basis points, with a depreciation rate of approximately 1.65%. Under the dual pressure of the weakening of the RMB and economic and trade frictions, textile and clothing imports continued to decline in 2019, with negative growth for seven consecutive months from May to November, and imports for the whole year fell by 5.8%.
The decline was mainly dragged down by textiles, which fell by 12.2%. Among the major categories of commodities, yarn and fabrics fell by 13.7% and 14.2% respectively, with double-digit declines, and finished products fell by 6%. From the analysis of the volume and price index, the decline in textile imports is the result of both volume and price declines, among which the factor of volume reduction is more prominent (see the volume and price index chart for details). In terms of material, the import of cotton yarn fabrics dropped by 15.8%, which was higher than wool products (15.3%), chemical fiber products and silk products (both 8.7%). Clothing imports maintained growth, with an increase of 8%. Among them, the growth of the large category of needle-woven garments was driven by a 10.5% increase in import prices, while the import volume decreased by 2.4%.
The import of intermediate products, especially yarn and fabrics, has a significant correlation with the export of textile and clothing in the following year. Based on simple calculations of import and export data in the past 20 years, the correlation coefficient between the import volume of yarn and fabrics in the previous year and the textile and apparel export volume in the following year reached 0.86, showing a relatively obvious positive correlation. The sharp decline in yarn fabric imports in 2019 may indicate a continued decline in textile and apparel exports in 2020.
U.S. cotton imports have fallen sharply,
The United States has lost the Market Position
In 2019, China imported 1.851 million tons of cotton, an increase of 17.5%, returning to growth for the third consecutive year. The average import price was US$1,930/ton, down 4.1% year-on-year. Although the overall growth was achieved throughout the year, monthly data showed that the growth was mainly concentrated in the first half of the year. Affected by the Sino-US economic and trade friction and tax increases, the textile market weakened from August to October, downstream demand decreased, cotton imports shrank, and the average monthly imports Less than 100,000 tons. From November to December at the end of the year, driven by the positive expectations of the signing of the agreement between China and the United States, imports rebounded slightly.
Since July 6, 2018, China has implemented countermeasures against the United States and imposed an additional 25% tariff on raw cotton imported from the United States. Cotton imports from the United States only increased by 4.5% that year. In 2019, the impact of countermeasures was further revealed. Imports from the United States for the whole year were only 360,000 tons, a sharp drop of 32% year-on-year. Among the main source countries of China’s cotton imports, the United States has quickly lost its leading position that it had maintained for many years, falling behind alternative countries Brazil and Australia. (505,000 tons and 398,000 tons were imported from Brazil and Australia respectively)
Imported cotton prices have been higher than domestic cotton prices for three consecutive months.
According to the monthly report of the China Cotton Association, in 2019, my country’s cotton policy remained stable, reserve cotton rotation was carried out in an orderly manner, imports increased, cotton production was stable and slightly decreased, and the market supply was abundant; affected by external uncertainties, The demand for cotton has decreased, and domestic cotton prices have fallen sharply. Since May, with the recurrence of Sino-US economic and trade frictions, the spot price of cotton futures has fallen sharply. Later, affected by the arrival of cotton from the state reserve and the positive progress of Sino-US trade negotiations, the price has recovered steadily. On December 31, China’s cotton price index CC Index (3128B) was 13,369 yuan/ton, and the annual average price was 14,212 yuan/ton, a year-on-year decrease of 10.5%.
International cotton prices rise. At the end of October, the Federal Reserve cut interest rates three times during the year, and international cotton futures and spot prices fluctuated and rose. At the end of the month, foreign cotton spot prices exceeded domestic cotton prices, and this continued until the end of the year. At the end of December, China’s imported cotton price index FC Index M was 79.47 cents/pound, discounted by the 1% tariff of RMB 13,724/ton, which was higher than the domestic spot price of RMB 355 during the same period.
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