In the first half of 2019, China’s economy faced a complicated development environment. The technical textiles industry has maintained stable operation by overcoming various unfavorable factors, and the industrial added value has increased by 7.6%. The main business income and total profit of enterprises above designated size grew by 6.32% and 1.49% respectively. Their growth rates were basically the same as that of the same period of last year. According to the survey of China Nonwovens & Industrial Textiles Association, the prosperity index of member enterprises in the first half of the year was 69.5, down 8.4 over the same period of last year. It was an objective reflection of the complex economic environment, but it was still in a relatively prosperous range.

I. Production Maintains Steady Growth

According to the research of China Nonwovens & Industrial Textiles Association, the demand index of enterprises in the first half of the year was 49.7, which was lower than the threshold for the first time. Among the surveyed companies, 34% said that the market demand showed a different degree of decline, and 6.5% said that the market demand reduced greatly; while one-third of the enterprises said that market demand is basically flat, and another one-third of the companies believed that demand has increased. However, the production index of the technical textiles industry has remained at a high level of 66.2, and the actual situation was better than the judgment on demand.

According to the National Bureau of Statistics, the output of nonwovens of enterprises above designated size was 2.16 million tons, seeing year-on-year growth of 11.41%, indicating that nonwovens are important raw materials for technical textiles, and their demand in various fields is still very large. In the first half of the year, China exported 497,000 tons of nonwovens, up 6.88% year-on-year. The output of tire cord fabrics of enterprises above designated size was 295,000 tons, down 9.83% year-on-year. It is a traditional product in the technical textiles industry, applying to vehicle tires. Because the sluggish of the automotive market, the production of tire cord fabrics is basically in a contraction state in recent years.

II. The Economic Benefits Have Steadily Rebounded

According to the National Bureau of Statistics, the main business income and total profit of enterprises above designated size in the technical textiles industry in the first half of the year were CNY 118.77 billion and CNY 6.02 billion respectively, up 6.32% and 1.49% respectively. And the industry’s profit margin was 5.07%, down 0.24 percentage points. From the perspective of profit composition, the industry’s gross profit margin was 14.07%, 0.5 percentage points higher than that of 2018. And the operating profit margin increased by nearly 0.5 percentage points. The factors that cause the decline in industry earnings were not business factors, but abnormal changes in extraordinary gains and loss.

In the first half of the year, the scale of losses of the technical textiles industry reached 15.52%, and the loss of loss-making enterprises increased by 20.73%. The change in the macro situation had a large impact on the operation of some enterprises in the industry. The survey results of the association also confirmed the relevant data. In the first half of the year, the income index of the technical textiles industry was 61, and the profit index was only 52.6; the output index was 66.2, but the finished product price index was only 44.2; the output growth rate was higher than the income growth, and the income growth rate was higher than the profit growth. The growth in the first half of the year was mainly driven by production. In the same period, the tax index of enterprises was only 44.2, which was in a falling range. This phenomenon indicated that the taxes and fees reduction policies have truly benefited the enterprises and ensured that enterprises maintained good performance under relatively difficult conditions.

By application fields, the growth rate of main business income and total profit of twine & rope (cable), ribbon industry was the highest, reaching 15.62% and 17.01% respectively, and its profit rate was 4.94%, which was at a relatively low level; the main business income of nonwovens increased by 6.84%, but its total profit decreased by 5.91%, with 5.03% of profit rate. The main business income of the textile belt and tire cord fabrics industry increased by 2.24%, while the total profit decreased by 3.73%, and the gross profit rate decreased by 0.7%.

III. The Export Increased Slightly

In the first half of the year, the exports of China’s technical textiles industry totaled US$ 13.13 billion, up 1.23% year-on-year. The impact of Sino-US trade friction on industry exports has already appeared in 2019. In the first half of the year, the exports to the US reached US$ 2.04 billion, down 3.05% year-on-year, especially for products with additional tariffs.

In the first half of the year, the exports of nonwovens and specialty yarns to the United States decreased by 17.65%, and the exports of technical textiles to the United States declined by 28.6%. The exports of the above categories to the world increased by 0.7% and -1.61% respectively. In the first quarter of the US import market, the share of the above two categories was both significantly reduced by 6 percentage points. However, the United States has a small share of the export market of these above two categories in China, and the impact of the reduction on total is basically controllable.

For products not included in the tariff list, such as nonwovens protective garment, tents, wipes and disposable hygiene products, their exports to the world increased by 10.83%, 6.04%, 7.47% and 16.09% respectively. Chinese products have obvious competitive advantages. With the expansion of Sino-US trade friction, the pressure on export growth in the second half of the year will increase.

From the perspective of export markets, Asia is the largest export area for technical textiles in China, accounting for 45.7% of the total. The export to the EU and North America accounted for 17.7% and 17.2% respectively, while the export to Africa accounted for only 6.2%. By region, the United States is China’s largest export market, accounting for 15.58% of the total, Japan and Vietnam ranked the second and the third, accounting for 6.53% and 6.02% respectively.

IV. Forecast for the H2

In the first half of 2019, the technical textiles industry has basically maintained a stable operation in the face of various unfavorable factors. It is expected that the second half of 2019 will continue the situation in the first half. The production and sales of major products will maintain medium and high-speed growth, and the industry profits will grow at a low rate.