China’s textile industry released its first quarter data

By Zhao Zihan

Since 2018, the global economic climate has continued to rise, and international trade has further recovered. China’s national economy has started to improve and the domestic demand market has been relatively active. Overall, it has provided a relatively good external environment.China’s textile industry has persisted in deepening structural reforms on the supply side, and has focused on promoting high-quality development.In the first quarter, it basically achieved a steady start.

According to the Spring Investigation of China National Textile and Apparel Council (CNTAC), the start-up of key enterprises and industrial clusters and their orders are normal. Most companies are cautiously optimistic about the development in 2018. The results of the “Tracking Survey of Corporate Executives” of CNTAC showed that the industry climate index in the first quarter was 57.3, which was in a stable development range. According to the data from the National Bureau of Statistics and China Customs, sales in and out of the industry in the first quarter have been steadily improving, production conditions have remained stable, and the quality of operations has remained basically stable.

The domestic and overseas markets are in sync with each other to a good prospect,and the relationship between supply and demand has improved.

In the first quarter of 2018, the domestic market for textiles and apparel in China accelerated its growth, and the growth rate of online channel sales increased significantly. According to data from the National Bureau of Statistics, the retail sales of apparel, hats, shoots, knits and textiles above designated size in the country increased by 9.8% year-on-year, 3.6 percentage points higher than the same period of last year, and the growth rate increased to be equivalent to the growth rate of total retail sales of consumer goods in the same period. The retail sales of online wearable goods increased by 33.9% year-on-year, a substantial increase of 18.3 percentage points from the same period of last year.

The textile and apparel export market continued to pick up. According to customs data, the total value of China’s textile and apparel exports in the first quarter was US$59.18 billion, an increase of 4.8% yearon-year, and the growth rate was 7.9 percentage points higher than the same period of last year. Export volume and value saw rising, and the number of exports increased by 4% year-on-year. Although the export price only increased by 0.8% year-on-year, it has reversed the negative growth trend in the past four years.The export competitiveness of textile yarns, fabrics and manufactured goods increased, with exports increased by 11% year-on-year; garment export pressure remained high, and exports only increased by 0.1%year-on-year. In the first quarter, the co-producing forces of the domestic and foreign demand markets formed positive support and effective impetus for the consolidation and improvement of the supply and demand relations in the textile industry to the dynamic balance and virtuous circle.

The production situation has remained stable and the supply structure has undergone in-depth adjustment.

In the first quarter of 2018, the capacity utilization rate of the textile industry maintained a good level.According to the data of the National Bureau of Statistics, the capacity utilization rate of the above-designated textile industry reached 80.7%, and that of the chemical fiber industry reached 81.5%, which was respectively 4.2 and 5 percentage points higher than that of the national above-designated industry. The growth rate of industrial production slowed down steadily.The industrial added value of textile enterprises above the designated size increased by 3.6% year-on-year and 1.5 percentage points slower from the same period of last year; the growth rate of the terminal chain of the industrial chain accelerated, and the growth rates of the industrial added value of home textiles and industrial textiles were 6.2% and 8.1% respectively,which were 5.4 and 5.5 percentage points higher than the same period of last year respectively, indicating a good connection between production and sales; the slowdown in production growth at the front end of the industrial chain indicates that the production capacity and supply structure are being continuously optimized and adjusted. The added value of cotton, dyeing and finishing industry and chemical fiber industry only increased by 0.8% and 3% respectively year-on-year.Positive progress was made in the manufacturing of new textile materials. The industrial added value of bio-based material manufacturing newly included in the national statistical catalog increased by 41.7%year-on-year.

Operating quality is basically stable and profit pressure has increased.

In the first quarter of 2018, the enterprises above designated size in the textile industry realized a total of 1,371.37 billion yuan in main business income, an increase of 3.1% year-on-year; main business revenues in the textile machinery, industrial textiles, and home textile industries increased by 16.8%, 7.1%,and 7% respectively year-on-year, making significant contribution to the industry’s revenue growth. The turnover rate of finished goods in the industry was 18.1 times/year; the total asset turnover rate was 1.35 times/year, and the proportion of three fees (financial costs, operating expenses and management fees) was 7.1%, which was roughly the same as the previous year. In the first quarter, the textile enterprises above designated size achieved a total profit of 61.27 billion yuan, a year-on-year decrease of 3.8%. Among them,the chemical fiber industry had a 15.2% year-on-year decrease in profit due to a higher base year-on-year,which had a more prominent impact on the industry’s decline in profits. The industry’s sales profit margin was 4.5%, a decrease of 0.3 percentage point from the same period of last year. According to the results of the “Tracking Survey of Corporate Executives” of CNTAC, 72.7% of the surveyed companies’ profits have increased or remained flat in the first quarter,indicating that the efficiency of most enterprises is basically normal.

The macroeconomic stability is getting better and the policy environment is gradually improving.

Looking at the development trend of domestic demand, in 2018, China’s national economy will continue to develop steadily, and move toward a new stage of high-quality development. The structural reforms on the supply side will continue to advance and the residents’ income will increase steadily, based on which, the vitality and stamina of the development of domestic demand for textiles and garments will continue to be released. In the first quarter, the per capita clothing expenditures of Chinese residents increased by 9.4% year-on-year. The people’s new expectations for a better life will promote the rapid increase of consumer experience and consumption environment, and the consumption channels and consumption areas will become more abundant. The domestic demand market will continue to provide strong support for the stabilized and sustained development of the textile industry.

In terms of external demand, the sustained and extensive recovery of the global economy is more obvious. Investment and trade in advanced economies are expected to usher in recoverable growth, and the demand for textiles and garments in the international market will continue to accelerate on an accelerated recovery track. Judging from the policy environment,since the launch of the new round of the State Reserve Cotton, the domestic cotton price and the difference between domestic and foreign cotton prices have been basically stable.

China’s support policies for the real economy have come to an end.From May 1st, the value-added tax rate of the manufacturing industry has officially been reduced from 17% to 16%. VAT small-scale taxpayers will also adopt unified standards, which is expected to reduce the tax burden on textile companies.

Uncertainty remains, and high-quality development needs to be promoted.

Although there are overall external conditions that continue to remain steady, we must also realize that in 2018, the development of the textile industry still faces many uncertain and unstable factors. At present, trade frictions between China and the United States are constantly escalating,the outlook for external demand is uncertain, and the international trade environment is also subject to deteriorating risks; the shortage of labor in enterprises is widespread, the supply of high-quality cotton is still insufficient, and factors restricting production factors are always present;the pressure of environmental protection supervision is still outstanding,which is an important factor that influences the production and investment of the industry. Faced with many risks, the textile industry will fully implement the spirit of the 19th National Congress of the Party and the Central Economic Work Conference and continue to adhere to the overall tone of steady progress, with building a textile power by 2020 as a strategic objective, it is to further advance the supply-side structural reform,continue to implement the “SanPin” strategy (i.e. to increase varieties,improve quality, and create brands) and accelerate the pace of industrial transformation and upgrading. We will strive to achieve steady increase in the number of major operational indicators in 2018, improve the performance of operations, and promote the textile industry to achieve highquality, stable and healthy development.