Developing Trend on China Textile Industry in 5 Years
Source: CCPIT TEX Date: 2007-01-22
-- Excerpted from the "Eleventh Five-Year Plan" Guideline for Chinese Textile Industry
During the Eleventh Five -Year Plan period, China's consumption structure isupgrading steadily and domestic demand has huge potential, also the society and this country's political status are stable. Adding a great labor resource, China's textile industry has constructed a strong industrial system to support it to become a real textile giant instead of just a 'size matter' giant. Nevertheless, the global textile and garment market is getting more and more competitive, and China is facing this aboil competition while still carrying internal problems and inconsistencies. Therefore, to accomplish the task of being a strong textile giant for China is highly challenging.
1. The developing trend on the global textile industry.
The growth of world economy pushes the growth of world textile industry
According to statistics from the WTO, the world economy increased by3.9% annually from 2000 to 2004 and for the same period of time, the value of world textile and garment trade kept on a 6.5% growth rate per year. As IMF has predicted that from 2005 and 2010, the world economy would be on an increasing speed of around 4.3% per year. Further prediction also suggested that in the coming five years, the world fiber consumption and textile and apparel trade would carry on rising on a 6.5% pace. Moreover, although China's textile industry has slowed down its growing speed after the post-quota period, its market share in world textile should increase.
Adjustments of the world textile industrial structure and layout bring more competitions
Firstly, multinational companies that mainly concentrated on division of labor are gradually moving towards developing countries; and many developed countries are using their advantages in capital, technology, brand and market resource and network to lead the market in high value added. Thus, the rules of international textile competition have changed accordingly from price and quality to high-tech and brands.
Secondly, as many developed countries have gradually stepped out from labor intensive industries, many developing countries and regions including China have fastened the development of their textile and garment industry. Other countries like India, Pakistan, Indonesia and regions in North Africa are becoming China's strong competitors, showing their talents in the low and middle-end markets by having cheap or cheaper labor cost, regional trade protection within the EU and the United States and other advantages.
Thirdly, regional economy allying and economic bilateral agreements are springing up globally and as a result, a strategic shift is happening in the world textile and garment industry. Countries such as Mexico and Caribbean in North America free trade zone and new members of the EU, are becoming important bases for the industrial movement of the textile business in the 'US and the EU. Also, the EU has constituted policies related to the textile industry, specifically to support its new members' textile development.
Trade protectionism and trade conflicts are difficult to avoid
The withdrawal of quotas in 2005 symbolized a substantial step towards the integration of global textile trade, and due to political concerns, some developed countries have adopted trade protection-ism in order to guard their own industries. Meanwhile, developing countries that have a fast growing textile industry are facing a heated competition in global textile market, therefore also using many means to protect their own market interests. Thus, trade conflicts between mainly developed countries and developing countries are inevitable for a longtime.
China's textile and garment industry could be facing four major measures of trade protectionism from some developed countries. First, section 15 of the Protocol on the Accession of the People's Republic of China; 'Price Comparability in Determining Subsidies and Dumping', section 16 'Transitional Product-Specific Safeguard Mechanism' and paragraph 242 of the Report of the Working Party on the Accession of China, the article on 'safe guards'. All these articles could be used to restrict Chinese textile exports.
Second, many kinds of non tariff walls could also used to bar Chinese goods such as; environment standard, social compliance standard, technical standard and market admission standard.
Third, China could get excluded by regional trade corporations or bilateral free trade system. Fourth and finally, China's market economy status has not yet been accepted globally, which could be used to guard its export goods.
High tech and informatization are the speedy trends
Developing towards electronic communication, bio engineering and advanced materials are the keys and main-stream for China's textile industry. The innovation and consumption of new textile materials will create significant impact on world textile production and consumption. For example, using compound, superfine, multiple profile, copolymerization, Nano and other techniques to develop differential fibers, functional fibers and high performance fiber, those materials can be applied greatly to agriculture, health care, construction, aviation, spaceflight, national defense and so on.
Furthermore, R&D in bio engineering projects that have strong environment friendly purpose, new green fiber technology and other energy saving technologies are a major developing trend. Textile industry should achieve an automatic and continuous production process and products should aim for a higher standard. In addition, information technology should be widely applied to production, circulation, management and so on amongst textile firms, in order to establish a complete system of quick response and consumption guiding.
2. China's textile industry developing trend
An increasing domestic demand remains to be the drive
Garment consumption is increasing, according to official statistics, from 2000to 2005 average garment consumption in Chinese urban and rural areas increased by 11.9% and 8.0% respectively (calculated by comparable price). Also according to an anticipated target that by2010 China's GDP will double 2000'sfigure, in the coming five years, China's fiber consumption (garment type) will keep growing on a quick pace.
Additionally, the market demand for home textiles will increase while real estate and tourism business continue to climb. Some have estimated that every percentage point is added to the urbanization, there will be about 15 mil-lion people newly added to the existing population.
Finally, industrial textiles consumption is growing fast owing to developments in automobile, construction, health, water conservancy, agriculture, transports, energy sources and other related industries. It is predicted that by2010, industrial textile fiber consumption would be about two million tons more than year 2005.
Industrialization sets higher demand on China
Having a new way of processing into industrialization is an evitable path for China, and through technology innovation and advancement to promote the transformation of economy growth, is the main line for China's textile industry during the Eleventh Five Year Plan period.
Firstly, there will be an increase in the input of R&D so that high tech can be of textile industry's services, and to support the establishing of brands in order to strengthen textile firms' competitiveness in the global market. Next, making a great deal of effort in cutting down single unit's energy costs, to improve the ability in regenerating resources and to invest in environment friendly equipments and technologies. Finally, increasing the level of using information technology, to enable upper and downstream, different markets and technical supply to connect and communicate with each other.
Regional industrial layout restructuring continuous
China will fasten its grand western development program, to shake up the old industrial bases in north east of China, to boost the development of the middle land and to promote eastern China to take the lead in developments. China's textile industry is under the transition of new industrial development strategy and the process of regional restructure continues. The restructuring should construct a mutual beneficial relationship between the three industrial zones. The east costal area has prominent advantages in textiles; however, this region is facing problems such as intensive labor, land resources, energy resources supply and high management costs. The middle land on the other hand, is growing with ample land resources and its urbanization has speeded up. Therefore it has a great potential in carrying on the labor intensive industrial mode from the east of China, as well as in the processing manufacturing field. Also, the west of China has ad-vantages in raw resources such as natural fibers and oil, and it is be coming China's base for raw material processing. The shift from the east coast to mid and west will construct a new industrial lay-out and system for Chinese textile industry.
The reform of China's economy system fastens the marketization of its textile industry
During the Eleventh Five Year Plan period, the Chinese government has put more pressure on administration system reform, tax system reform and finance sys-tem reform. Cotton production, trade and consumption circulation system reform is quickening its pace, besides, its administration, operation and market systems are becoming more mature. Also, more strength has been given to the reform of investment system so that the environment for investing is more regulated. So with all necessary reform and adjustments the Chinese market system for textiles is on the road to profession, and the marketization of the country's textile industry is progressing fast.
In addition, the revaluation of Chinese currency has had a considerable impact on textile industry but in a long run, it has significant implications on the industrial structure adjustment and the shift of economy growth mode. Therefore, China's textile industry should get used to the floating currency rate, and to improve its management ability to an international standard and the textile industry should build up its capacity in resisting the risks that the revaluation of Yuan might bring.
A growing demand on imports could increase market risks
Cotton and oil are the two major raw materials that China imports heavily and in 2005, China demanded a total 9.4 mil-lion tons of cotton and 40% of it relied on imports. As predicted, by 2010 China's cotton consumption will reach over ten million tons, also China can only supply about 6.5 million tones of domestic cot-ton at the same year. So with a recent quantity of around eight and nine million tons of global cotton trade, a shortage in cotton supply will continue to take place and it could increase the market risks for cotton industry.
Meanwhile, raw materials for man-made fiber are still largely depending on imports. In 2005, China's imports of all raw materials for man-made fiber took an average of over 60%, thereinto, 56.4% of PTA and 78% of EG for PET fibre were relied on imports; 66% of CPL and 31%of AN were also imported. During the Eleventh Five Year Plan, as a number of man-made fiber related plans have been taken into action, the production quantity of main raw man-made fiber materials such as PTA and EG should increase remarkably. However, man-made fiber's proportion in fiber processing is still growing so largely, depending on import swill remain a current situation for China.
Source: CCPIT TEX
