Favorable Factors Will Gradually Come to the Fore despite the Gloom

Chinatextile industry reported down turn in its economicperformance in first quarter of 2009

CNTEX Exclusive: China National Textile and Apparel Council (CNTAC) recently released the industry situation in first quarter of 2009. In the first two months, the output, sale, imp. & exp. of textile industry grew at a slower pace than last year. Although the Chinese government has published a series of policy for textile industry, the outcome of these fiscal polices tend to be small at this stage, since the effects of fiscal policies in one country normally is hysteresial.

The growth rate of output & sale continues to shrink

The output continues to shrink in first two months of 2009 with the pessimistic forecast being negative growth in this year. The total industrial production value of statistics-worthy Chinese textile enterprises (whose annul output beyond five million RMB) grew 2.63 percent year-on-year to CNY451.100 billion, 13.92 percentage points lower than the same period last year; the total sales value was CNY440.762 billion, up 3.13% year-on-year, 14.55 percentage points lower than the same period last year. 

Of which, the yarn output of statistics-worthy enterprises was 2.8684 million tons, up 5.9% year-on-year, fabric 0.6927 million metres, down 5%; garment 0.3455 billion pieces, down 6.6%; chemical fibre 3.5488 million tons, up 3.9%.

Investment sees negative growthfor the first timein 10 years

In the first two months, the accumulated investment for statistics-worthy textile projects (whose investment beyond five million RMB) reached 17.745 billion RMB, down 9.78%. Of which, the amount put in cotton textile sector decreased 21.96% from year ago, 21.01% lower than the same period last year; the amount put in garment sector increased 5.42%, 21.01% lower than the same period last year; and that for chemical fiber and textile machinery sectors rose 7.74% and 25.98% respectively, 23.20% and 8.65% higher than the figures achieved last year.

Exports falter

The accumulated export of textile and garment were 22.451 billion USD in the first two months, down 14.78% year-on-year, 24.37 percentage points lower than the same period last year. Of which, the textile export was 7.834 billion USD, down 20.94% year-on-year, 37.78 percentage points lower than the same period last year; garment 14.617 billion USD, down 11.07 5% year-on-year, 16.71 percentage points lower than the same period last year.

Data showed that China textile and garment exports to the US posted 8.05 percent decline from a year earlier to $3.431 billion in Jan. and Feb., 1.52 percentage points lower than the same period last year. China textile and garment exports to EU posted 14.94 percent decline from a year earlier to $5.252 billion in Jan. and Feb., 51.6 percentage points lower than the end of last year.

The growth rate of China textile and garment exports to non-US and non-EU markets was 3.91% lower than the growth rate of exports to the US and EU markets, which shows that demand of emerging markets is likely to shrink.

Profit continues to slide

From Jan. to Feb., total profit for statistics-worthy textile enterprises was $12.480 billion, down 11.01%, 24.49 percentage points lower than the same period last year. Textile employment continues to fall in China, with 0.5 million jobs disappearing in Jan. and Feb.

Favorable factors will gradually come to the fore

The Chinese government has published a series of policy for textile industry to help producers cope with the paper-thin profit margins squeezed by slacking market demand. First-quarter data already shows a little recovery compared with the negative growth rate in first two months. Anyway, every difficulty is also an opportunity. We're hoping spring will come!