Since the beginning of 2020, the outbreak of new coronavirus has wreaked havoc on the economies of various countries. According to the prediction of the World Bank in June 2020, the global economy will decline by 5.2% year-on-year in 2020. Meanwhile, it also leaves a mark on global trade activities. It is expected that the global trade volume will decrease by 13.4% year-on-year in 2020. From a domestic perspective, economic activity is still under pressure, but it has significantly eased from that of the first quarter. The decline of industrial production has narrowed; the decrease of fixed-asset investment has slowed down; domestic consumer activity has gradually increased.

At present, in the face of a complex and severe domestic and international circumstance, China’s textile industry is still under great operating pressure. Most of the textile industry chain faced continuous slowdowns in supply and demand. Both corporate investment and industry efficiency decreased. Only the technical textile industry performed well due to the urgent demand for anti-epidemic materials. And the economic benefits of related enterprises have improved significantly, showing a rapid growth momentum.

From a long-term perspective, China’s epidemic prevention and control has been further consolidated, and the production and living order was back on track. Related work of stability on the six fronts and security in the six areas has promoted smoothly. The government focus on maintaining security in the six areas in order to ensure stability on the six fronts. By doing so, it is possible to keep the fundamentals of the economy stable. Maintaining security will deliver the stability needed to pursue progress, thus laying a solid foundation for accomplishing the goal of building a moderately prosperous society in all respects. All of these positive factors will support China’s textile industry to gradually return to stable operation.

01

The decline in production has been further narrowed, and the production of technical textiles has grown significantly

According to the National Bureau of Statistics, from January to April 2020, the value-added industrial output of textile enterprises above designated size decreased by 11.3% year-on-year, 5.2 percentage points narrower than that of the first three months. In all sectors of the industrial chain, the added value of the technical textile industry increased significantly, up 33.8% year-on-year, 22.3 percentage points higher than that of the first three months. And the remaining industries all showed a varying degree of decline.

The output of key textile products has seen a nosedive compared with the same period in previous years. Only the production of nonwovens maintained a slight increase. According to statistics, from January to April 2020, the output of China’s nonwovens enterprises above designated size reached 15.6 billion meters, seeing a year-on-year increase of 2.3%. Among them, Zhejiang Province, Fujian Province, Shandong Province, Jiangsu Province, and Guangdong Province are the top five nonwovens production provinces, with a total production of 9.87 billion meters, accounting for 63.3% of the national output.

02

Domestic market consumption is sluggish, and the online channel consumption is gradually starting

Affected by the impact of the epidemic, as optional consumer goods, apparel saw relatively large consumption flexibility. During the overall decline in consumer demand, the drop in apparel consumption has become more pronounced. According to data from the National Bureau of Statistics, from January to April 2020, the total retail sales of consumer goods in China amounted to over CNY 10.67 trillion, seeing a year-on-year decrease of 16.2%. Thereinto, the retail sales of clothing, foot & headwear and knitted goods above the designated size were CNY 305.7 billion, down 29.0% year-on-year. Its proportion in the retail sales of social consumer goods decreased from 3.44% last year to 2.86%.

Online retailing is gradually recovering in the current consumer environment. In the first four months, the online retail sales of wearing goods decreased by 12.0% year-on-year, 2.9 percentage points narrower than the first three months. By key categories, Women’s wear and home textiles resumed quickly. According to relevant data on the Alibaba platform, in March 2020, the sales growth rate of women’s wear and home textiles on the platform achieved 3.5% and 10.8% respectively. By April 2020, their growth rate increased to 47.5% and 34.4%, respectively. In addition, the sales of men’s wear are also in the recovery stage.

03

Apparel exports fell dramatically, and surgical masks became the pillar product for textile exports

The consumption demand for apparel in key global markets has declined significantly, but the import demand for related medical protective equipment has surged. According to China’s Customs Express, from January to May 2020, textile and apparel exports reached US$ 96.16 billion, down 1.2% year-on-year, 8.8 percentage points lower than that of the first four months. Among them, textile exports were US$ 57.95 billion, up 21.3% year-on-year; apparel exports were US$ 38.21 billion, down 22.8% year-on-year.

Among the key categories of increased textile exports, surgical masks have become a pillar product for textile exports. According to China’s customs statistics, from January to April, the export value of China’s surgical masks accounted for 33.0%, 40.0%, and 54.0% respectively to the United States, Japan, and the European Union.

04

Industry investment willingness is recessed, and the fixed-asset investment scales down

Since the beginning of this year, the overall investment willingness of China’s textile industry is recessed, and the fixed-asset investment scales down. According to data from the National Bureau of Statistics, from January to April 2020, the fixed-asset investment of China’s textile industry fell by 33.9% year-on-year, 4.1 percentage points narrower than the first three months. Among them, the fixed investment in the textile industry dropped by 32.5% year-on-year; the apparel industry, 41.7%; the chemical fiber manufacturing industry, 16.2%.

By major provinces, driven by the investment in epidemic prevention-related projects, only Yunnan Province, Shaanxi Province, and Gansu Province have achieved positive growth in the investment in the textile industry. The remaining provinces have sluggish investment willingness.

05

Increased pressure on operation quality and efficiency, and improved performance of the technical textile industry

The pressure on the efficiency of the textile industry is greater. According to data from the National Bureau of Statistics, from January to April 2020, textile enterprises above the designated size achieved over CNY 1.19 trillion worth of operating income, seeing a year-on-year decrease of 19.7%; their profit totaled CNY 37.7 billion, down 32.1% year-on-year; the operating profit margin of the enterprises was 3.2%, 0.6 percentage points lower from the same period last year.

From the perspective of all sectors in the textile industry, the quality and efficiency indicators of the technical textile industry have improved significantly. According to estimates, from January to April 2020, the operating profit margin of the technical textile industry was 9.3%, 4.8 percentage points higher than that of the same period last year; the share of three overheads in turnover was 8.0%, 0.2 percentage points lower than the same period last year; the asset-liability ratio was 49.2%, down 1.0 percentage points from the same period of last year; and the total asset turnover was 1.2 times/year, which is the highest among all textile subindustries.

06

Positive factors still exist, and the operation may improve in the second half of 2020

In 2020, global economic and trade activities are likely to show a downward trend. In order to contain COVID-19 worldwide, the health care infrastructure has been strengthened, and some economic activities have to be suspended. Both the World Bank and OECD have predicted that the global economy will see a nosedive in 2020.

Meanwhile, the OECD has predicted that the global unemployment rate will rise sharply to 10.0% in 2020. The global trade market is shrinking, and the export market of China’s textile industry will be under pressure simultaneously.

But the current epidemic prevention and control in China performed well, the government promotes the whole industry chain to resume production and reduce the burden on enterprises, and expand the domestic consumer market. According to relevant data from the Ministry of Industry and Information Technology, as of May 18, 2020, the average operating rate and the return rate of employees in enterprises above designated size reached 99.1% and 95.4%, respectively, basically reaching normal levels. The central government has quickly adopted a host of policies to reduce the burdens of businesses, particularly small and medium enterprises and self-employed people. These include measures such as reducing fees and lowering taxes, increasing government subsidies, strengthening financial support, stabilizing and expanding employment, and improving government services. It is expected that the support role of the domestic market will gradually recover, and the operation quality of the textile industry in the second half of the year may be somewhat improved.