China's Textile Exports Face More Challenges

February 21, 2007 Updated: February 21, 2007

With the appreciation of the Chinese yuan and the lowering of the export tax rebates for textiles, China's textile exports are gradually losing their low-cost advantage across the global market. Textile export business is becoming more and more difficult.

According to a recent report by the Industrial Department under the National Development and Reform Commission of China, the total volume of textile exports increased in 2006, up 21.2 percent from 2005. Although the sector appears to be manageable, the textile industry, accounting for 15 percent of the country's total exports, is facing an increasingly challenging environment.

If the value of yuan is raised by one percent, the bargaining capability of the entire textile industry will decline substantially while the influence on the textile exports will become more obvious. With the realization of the integration of global textile trade and the emerging post-quota trade regime, the anti-dumping investigations into China's textile exports in the world will increase.

The report says that developed countries not only take irregular steps such as trade frictions to restrict China's textile export growth, but also continuously use reasons such as anti-dumping to weaken the competitiveness of China's textile products in the global market.

This tremendously decreased the export orders to European and American markets, which turned their sales to Southeast Asian countries, thereby directly impacting on the steady growth of China's textile exports in these areas.

The average profit margin of China's textile industry is around 3.5 percent annually. The domestic marketing will become the primary focus of China's textile industry with such a grim situation for exporting.