2016 China's textile industry economic operation status and forecast

Introduction: Since 2016, in the face of the complex and grim external situation, China's textile industry has insisted on accelerating the transformation and upgrading, focusing on deepening supply-side structural reforms, maintaining stable economic performance, and achieving growth in major indicators such as production and sales, and efficiency, and export declines. Showing a narrowing trend, the overall realization of a smooth start.

Most of the textile industry's operating indicators have grown more steadily, and some indicators have grown faster than the national industrial level.

According to data from the National Bureau of Statistics, from January to March 2016, the industrial added value of textile enterprises above the designated size increased by 6.7% year-on-year, which was basically the same as in 2015, which was higher than the 0.9% growth rate of industries above designated size in the same period. The enterprises above designated size achieved a total of 1,552.41 billion yuan in revenue from their main operations, an increase of 5.1% year-on-year, which was 2.7 percentage points higher than that of the national industry. The total profit was 76.89 billion yuan, a year-on-year increase of 6.5%. Exports of textiles and clothing are showing signs of improvement. According to the Customs Express data, total exports of textiles and garments in China for the first four months were US$77.49 billion, a year-on-year decrease of 2.7%. However, since March, export declines narrowed month by month, from January to April. Compared with January-February and January-October this year, they rose by 13 and 2.5 percentage points respectively.

The economic development quality and structure of the textile industry continue to show positive changes

The industry's operating quality was steadily improving. From January to March 2016, the profit margin of enterprises above designated size was 5%, which was 0.1% higher than the same period of last year; the total asset turnover rate was 1.5 times/year, which was a 0.5% increase year-on-year. The finished product turnover rate was 19.8 times/year, an increase of 0.4% year-on-year. The development momentum of industrial textiles is still good. From January to March, the industrial added value and total profit increased by 10.5% and 9.4% respectively, both higher than the industry-wide level. The new channels and new businesses basically maintained stable growth. The retail sales of online wearable goods nationwide increased by 16% in the first three months from January to March, although the growth rate was still significantly higher than that of the same period last year as the base increased. Entity internal demand channels and exports play an important role in activating the domestic demand potential of textiles and apparel.

The position of the textile industry in the central and western regions will further increase

On the one hand, the infrastructure and industrial facilities in the central and western regions have been continuously improved and the industrial undertaking capacity has been enhanced. In particular, the provinces of Xinjiang, Shaanxi, and Ningxia in the western region have been vigorously inviting investment, and the textile industry chain has been more robust and the scale has continued to expand. On the other hand, the State Council’s Medium- and Long-Term Plan for the Development of Logistics Industry (2014-2020) and the Guiding Opinions of the General Office of the State Council on Measures to Eliminate the High Cost of Corporate Financing Continuing to Promote Policies, Logistics Costs in the Central and Western Regions With the gradual reduction of corporate financing costs and the advantages of labor costs in the Midwest, the advantages of developing the textile industry in the central and western regions will be highlighted.

The textile industry is still facing a series of practical problems and needs to strengthen attention and response

The growth of external demand remained sluggish, and international competition continued to intensify. From January to March 2016, the share of China’s textile and apparel exports in the United States and Japan’s import market decreased by 1.8 and 2.3 percentage points year-on-year, respectively, and the share of the EU in January-February. It dropped 3.1 percentage points. The overall slowdown in domestic demand growth and the declining macroeconomic growth have a restrictive impact on residents' income growth and consumer sentiment. The increase in food price increases also has a crushing effect on the growth in demand for textiles and apparel. The overall cost pressure has not been eased. The cost of labor, electricity, and power consumption in China's textile companies are at a disadvantage in international comparisons. The trend of shifting processing orders and production capacity in labor-intensive sectors to overseas remains.

In 2016, the overall textile industry will maintain stable operation

Although the growth rate of the domestic market has slowed down, China’s macro economy will maintain stable growth in a reasonable range, domestic demand will expand steadily, and the general trend that is better than exports will not change. It is still the primary supporting force of the textile industry. The situation of cotton supply has been initially improved. Reserve cotton has started to turn around since May. The quality and turnover of cotton in the early stage have been relatively good, which will help increase the effective supply of textile raw materials and stabilize the production of enterprises. However, the textile industry is still facing greater pressures for development. The global economic recovery continues to be weak. It remains to be seen whether the industry's exports can continue to rise. It is difficult to completely ease the overall cost pressures of textile companies. There are still risks of structural shortage of high-grade cotton following the supply of cotton.


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