The textile industry’s foreign trade picks up but no profit

by Zhao Xinhua

Towards the end of 2020， Chinas foreign trade surplus hit a record high， exceeding USD 75.4 billion in November， reaching a 21.1 percent export growth rate. In May， this figure was still negative.

Chinas foreign trade situation has reversed within half a year. In June 2020， the General Office of the State Council also issued a document to support the transfer of export products to domestic sales. The rescue of foreign trade enterprises was the topic at that time.

From the November 2020 National Export Key Commodity Value Table released by the General Administration of Customs， it can be found that the commodities with the highest increase in cumulative exports from January to November over the same period in 2019 are medical instruments and equipment， an increase of 42.5 percent， ranking No. 2 is textile yarns， fabrics and made-ups with a year-on-year growth of 31 percent， and its growth rate for the month is also close to 21 percent. The rebound of the textile industrys foreign trade in the second half of the year was mainly due to the rebound of traditional textile exports.

According to the National Bureau of Statistics， from January to September 2020， the export delivery value of domestic textile enterprises above designated size fell 6.05 percent year-on-year， but it has achieved positive growth in the third quarter， with an increase of 9.34 percent， and an increase of 19.56 percent in September.

In addition to home textile products， export orders for fabrics have also surged. A quarter of the worlds fabrics are traded in Keqiao， Shaoxing every year. The foreign trade prosperity index of the Keqiao Textile Index released locally shows that in November 2020， it increased by 10.4 percent year-on-year to 911.77 points， the highest value since 2019. Although foreign trade orders surged in the second half of the year， it was still difficult to make up for the losses in the first half of the year. The data provided by the Keqiao District Bureau of Commerce also shows that even after the order growth in the third quarter， from January to October 2020， the cumulative export value of enterprises in the district fell by more than 20 percent.

When orders increase， shipping costs to the United States slowly increased from September 2020. On December 31， 2020， the China Containerized Freight Index（CCFI） released by the Shanghai Shipping Exchange exceeded 1，600 points for the first time， standing at 1，658.58 points， setting a record high. The CCFI record has been continuously refreshed in 2020. The reason is that the transport capacity has not recovered to the pre-pandemic level， and exports have rebounded to a level better than normal.

It is difficult for the retail prices of textiles to rise， and similarly， the increase in the factory prices of enterprises is also limited. Coupled with the appreciation of the RMB in the second half of the year， the textile industrys foreign trade orders basically have no profits due to the increase in shipping costs and the appreciation of the RMB.