Sino-US trade friction accelerates the structural adjustment of China's textile and garment exports.

Release time:

2019-05-29

The escalation of Sino-US trade friction will accelerate the adjustment of China's textile and garment export structure and the transfer of industrial chain to Southeast Asia and other places.

In the first quarter, China's textile and clothing exports totaled 385.21 billion billion yuan, up 3.3 percent year on year. Among them, textile exports 183.87 billion yuan, an increase of 9.3; clothing exports 201.34 billion yuan, down 1.6. "In January this year, textile exports had hit a new high since September last year. By the Spring Festival factors coupled with the 'grab exports' impact, February textile exports suffered a halving, a new low since February 2017. In March, textile exports strong, reversing the first two months of double-digit decline in exports, strong pull the first quarter of the overall export recovery growth and showed a slight rise." Yu Xiaohong, an analyst at Zhongyu Information, said that exports fluctuated sharply in each month of the first quarter, but textile and clothing exports as a whole still showed a good development trend.

"Against the backdrop of the global economic and trade slowdown, China's textile and apparel exports will continue to be under pressure. In the first quarter, overseas buyers purchased to wait and see, and some large international buyers adjusted their strategic layout, requiring Chinese production and processing enterprises to shift part of their production capacity to Southeast Asia and other places in advance." Yu Xiaohong said that in the future, clothing exports may continue to decline, while the corresponding supply chain raw materials supporting textile exports are expected to catch up with clothing exports.

At present, China's textile and garment market is more dependent on exports. According to incomplete statistics, China's textile and clothing exports exceeded $270 billion in 2018, while domestic textile and clothing retail sales were around $200 billion. The United States is my country's largest textile and apparel exporter, of which pure cotton textiles and apparel exported to the United States account for about 17% of my country's total cotton textile and apparel exports.

"The imposition of tariffs on textiles and clothing by the United States will directly increase the export costs of my country's textiles and clothing and weaken the price competitiveness of related products." Zhongyu Information related analysts said that in recent years, the textile and garment industry in Southeast Asian countries, mainly Vietnam, has developed rapidly, and will probably occupy part of China's textile and garment market share exported to the United States in the future.

The escalation of trade friction between China and the United States has also directly accelerated the devaluation of the RMB. In the month since Trump announced the tax increase in April, the yuan has depreciated from 6.7 to about 6.9 against the dollar. And since the start of the U. S.-China trade friction in March 2018, the yuan has depreciated from 6.3 to around 6.9 against the dollar. Relevant analysts of Zhongyu Information reminded that currency devaluation can temporarily benefit product exports, but the sharp depreciation of the currencies of Argentina, Turkey and other countries against the U.S. dollar has triggered a financial crisis, leading to the deterioration of the economic situation, and the long-term impact of rapid currency devaluation on the market should not be underestimated.

At present, the structural adjustment of China's textile and garment industry is accelerating. According to the National Bureau of Statistics, the gross profit of China's textile and garment industry fell from 12.14 percent at the end of 2012 to 10.16 percent at the end of 2018. Under the general trend of rising labor costs and environmental protection costs, the gross profit margin of the textile and garment industry continued to decline, and the gross profit margin in 2018 fell to the lowest point in nearly 10 years. The number of textile enterprises above designated size with annual revenue of 20 million yuan also dropped from more than 22000 in March 2011 to more than 19000 at the end of 2018. The fierce competition has accelerated the trend of textile enterprises to "go to small and stay large" and the relocation of factories.

(Source: Department of Commerce)

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