Faced with a complex and volatile external environment this year, China’s textile industry adhered to the principle of making progress while maintaining stability. It steadily advanced its industrial restructuring, deepened the transformation and upgrading of foreign trade, and benefited from China’s stable macroeconomic performance along with current and new policy measures. As a result, key indicators such as production, domestic sales, and investment continued to grow, keeping the industry’s economic trajectory broadly stable. However, risks like increased external trade uncertainties and intensified market competition have become intertwined, creating ongoing pressure on corporate profitability recovery. Looking ahead to the fourth quarter and 2026, the development environment for the textile industry remains complicated and challenging, with many issues still to be addressed in building a solid foundation.

Production Growth Stabilizes with Gradual Deceleration

In the first three quarters of this year, the textile industry kept capacity utilization within a reasonable range, with overall stable production conditions. However, amid increasingly complex international situations and persistently weak end-user demand, production growth has shown a gradual slowdown. According to data from the National Bureau of Statistics, the capacity utilization rates for textile and chemical fiber enterprises above designated size reached 77.6% and 85.8% respectively during the first three quarters, both surpassing the national average of industrial enterprises above designated size (74.2%) during the same period. Industrial added value for textile companies above designated size increased by 2.1% year-on-year, with the growth rate slowing by 2.4 and 1 percentage points compared to the same period last year and the first half of this year, respectively. Out of the 15 major categories of textile products tracked by the National Bureau of Statistics, seven categories experienced year-on-year production growth.

Domestic Sales Maintain Steady Growth

Since the start of this year, the nationwide campaign to boost consumption has been steadily underway, with consistent growth in residents’ demand for clothing. Domestic sales of textiles and apparel continued their steady upward trend in the first three quarters. According to data from the National Bureau of Statistics, retail sales of clothing, footwear, headwear, and knitted textiles above a designated size reached nearly 1.1 trillion yuan, up 3.1% year-on-year, which is 2.9 percentage points higher than the same period last year. Online retail channels for textiles and apparel kept improving each quarter. In the first three quarters, nationwide online retail sales of apparel grew by 2.8% year-on-year, with growth rates increasing by 2.9 and 1.4 percentage points compared to the first quarter and the first half of this year, respectively. Upgraded consumption segments such as Chinese chic and sports/outdoor apparel remained vibrant, while business models like live-streaming e-commerce helped the industry fully meet consumers’ diverse, high-quality, and personalized demands for textiles and apparel, fueling synchronized growth in both online and offline sales.

Export Pressures Gradually Emerge

Since the beginning of this year, the textile industry has faced an exceptionally complex and challenging international environment. Amid rising tariff disputes and the restructuring of global textile supply chains, the industry’s foreign trade has fluctuated under pressure. According to China Customs, textile and apparel exports totaled US$221.69 billion in the first three quarters, showing a 0.3% year-on-year decrease, with cumulative growth turning negative for two consecutive months.

From the perspective of export product structure, China’s major intermediate products, such as chemical staple fiber and textile yarn, have demonstrated strong growth momentum. This has propelled textile exports to reach US$106.48 billion in the first three quarters, an increase of 2.1% year-on-year, serving as a vital pillar supporting the industry’s export resilience amid a challenging foreign trade environment. However, amid multiple complex factors—including tariff disruptions, slow improvement in overseas demand, and the prolonged destocking cycle of international brands—the pressure on apparel exports has become more evident. Apparel exports in the first three quarters totaled US$115.21 billion, a decline of 2.5% year-on-year.

From the perspective of export market structure, China’s textile and apparel exports to major global trading partners have increasingly diverged. Due to U.S. tariff policies and re-export trade inspections, exports to the United States and ASEAN declined significantly. Textile and apparel exports to the U.S. and ASEAN in the first three quarters fell by 10.1% and 4.7% year-over-year, respectively. Facing a complex global trade environment, foreign trade companies have actively promoted market structure optimization and business adjustments, further expanding into diverse international markets. This process has gradually strengthened their support for industry exports. In the first three quarters of this year, textile and apparel exports to trading partners such as the EU, the UK, India, Canada, Nigeria, and Chile all experienced steady growth.

Investment Growth Remains Steady

Backed by the national “Two Priorities” and “Two New” initiatives policies, leading enterprises have concentrated on key areas and weak links in the industrial chain since the start of this year, speeding up technological upgrades toward high-end, smart, and environmentally friendly manufacturing. Fixed-asset investment in the textile industry has maintained steady growth despite last year’s high baseline. In the first three quarters, fixed-asset investment in China’s textile, apparel, and chemical fiber industries (excluding rural households) rose by 11.2%, 14.8%, and 11.6% year-over-year, respectively. Notably, the chemical fiber sector’s investment growth sped up by 6.9 and 1 percentage point compared to the same period last year and the first half of this year, respectively. According to a survey by the China National Textile and Apparel Council in the third quarter on new fixed-asset investments among major textile companies, 54.5% of the surveyed companies focused heavily on capacity upgrades and transformation. This share has shown a quarterly increasing trend since the beginning of this year, reaching its highest level since the third quarter of 2023.

Operational Efficiency and Quality Remain Under Pressure

Since the beginning of this year, textile companies have faced increased competition both domestically and internationally, along with numerous operational challenges caused by factors like weak terminal demand and rising export pressures. In the third quarter, supported by the partial suspension of U.S. tariff measures and the peak order season, some industry indicators showed slight signs of recovery from their previous declines. Data from the National Bureau of Statistics indicates that in the first three quarters of this year, the operating revenue of 38,000 textile enterprises above designated size in China fell by 3.8% year-over-year. Although total profits still declined by 7.2% year-over-year, the drop narrowed by 2.2 percentage points compared to the first half of the year. Different segments of the industrial chain experienced varying pressures. While revenue from filament weaving and technical textiles continued to grow, subsectors like wool textiles, knitting, printing and dyeing, and apparel faced ongoing challenges in boosting profitability. During this period, the operating income profit margin of textile companies above designated size stood at 3.1%, down 0.1 percentage points from the previous year. Due to increased market competition and inventory fluctuations, the total asset turnover rate and the finished goods turnover rate of enterprises above designated size slowed by 5.5% and 4%, respectively, year-over-year. 

Complex Circumstances Temper Development Resilience

Looking ahead to the fourth quarter and 2026, the textile industry continues to face many unstable and uncertain factors, making it challenging to keep operations steady. The global situation remains tense overall. Regular changes in tariff policies and rising trade barriers have pushed the international economic and trade order to a critical point. Slow economic growth, weak improvements in end-user demand, and major shifts in the international textile supply chain are widely expected. Although Sino-US economic and trade competition has become somewhat calmer, the ongoing complex dynamics of both competition and cooperation will likely continue long term. Fluctuations in the trade environment are possible, and export pressures on the textile industry probably won’t ease quickly. China is in a key phase of economic restructuring, shifting between old and new growth drivers. Domestic demand stays relatively weak, market competition grows more intense, companies face many operational hurdles, and profit recovery happens slowly. The tasks of strengthening development resilience and achieving high-quality growth remain difficult and urgent.

Amid this complex landscape, China’s strong macroeconomic resilience and its extensive, continually improving domestic market will remain the main pillars supporting the textile industry’s efforts to develop a modern industrial system, facilitate industrial economic flow, and achieve high-level self-reliance through profound transformation and upgrading. Currently, and throughout the 15th Five-Year Plan period (2026-2030), with a focus on expanding domestic demand and national initiatives to increase consumption, the industry will aim to grow a high-quality supply. Efforts will span multiple areas—brand leadership, standard improvements, new technology adoption, and consumer scenario development—to promote the expansion and upgrading of the textile and apparel market. At the same time, the global textile industry chain and supply chain are undergoing structural adjustments alongside China’s domestic textile sector. High-quality production resources will accelerate their movement toward high-efficiency enterprises, key industry segments, and strategic regions. This will effectively boost corporate innovation and industrial upgrading, helping to offset downward risks and pressures. Furthermore, China’s macroeconomic policies still have room for further strengthening. As the construction of a unified national market deepens and supporting policies—such as capacity management in key industries and market competition regulation—are implemented, strong policy safeguards will support the textile sector in maintaining a dynamic balance between supply and demand.

Source: CHINA TEXTILE LEADER Express