Textile and apparel foreign trade's overview

In the first half of the year, national exports of goods showed a good growth trend, but corporate profits were generally squeezed. From the data point of view, the overall textile and apparel exports have shown a good and healthy growth trend, still increasing by 12.8% under the influence of a high base, and the traditional bulk commodity exports have all achieved double growth (compared with the same period in 2020 and 2019). In field surveys, companies also generally report that there are sufficient orders on hand and the factory operating rate is full.

However, corporate profits have been strongly squeezed by fluctuations in the RMB exchange rate, skyrocketing ocean freight, and rapidly soaring import prices for raw materials and semi-finished products. Sea freight has doubled compared to last year, and it is difficult to find a container, which has led to a substantial increase in transportation costs for enterprises and an increase in the probability of default. As of the end of July, rising freight rates and port congestion have not been fully alleviated, becoming the biggest uncertainties affecting exports in the second half of the year. The increase in the price of upstream raw materials caused by global inflation has not been transmitted to the simultaneous increase in the sales price of downstream finished products. The total export price of knitted garments in the first half of the year fell slightly by 0.8% year-on-year. In the domestic market, in the first half of the year, the national factory prices for industrial producers increased by 5.1% year-on-year, of which clothing fell by 0.9%. Instead of rising, the overall level of consumer prices across the country rose by 0.5% over the same period last year, and clothing prices remained flat. Under the impact of the two sides, downstream apparel companies, especially small and medium-sized enterprises, are in a situation of unprofitable or even loss.

Excluding sudden uncertain factors, the probability of a small increase in exports throughout the year is relatively high. Looking forward to the second half of the year, the continued growth of the world economy and the Chinese economy will provide a driving force for exports.

According to the IMF’s latest forecast of global economic growth, global economic growth this year will reach 6%, the highest growth rate in the past 40 years; next year, it is expected to reach 4.4%, which is significantly higher than the average growth rate of the world economy since 1990. Among them, the number one engine driving global economic growth is still China. Due to China's outstanding performance in fighting the epidemic and rapid recovery of economic activities, the IMF predicts that China's economic growth rate will reach 8.4% this year, which is higher than the target of more than 6% set by the Chinese government.

In the second half of the year, although it is hard to say that the global epidemic has an inflection point, it is expected to be further eased as the scope of vaccination continues to expand. Consumption continues to recover, which will lead to a rebound in key market demand and promote global trade growth. In addition, there are still opportunities under the epidemic. It is reported that the epidemic in Vietnam has become severe again recently. The government has taken quarantine measures, which has led to a decline in local production capacity. Some orders returned to the country were taken by our company, which is good for exports. It is expected that in the second half of the year, textile and apparel exports will continue to maintain a steady and positive development trend, and there is a high probability that there will be more than expected performance.

Due to the large base in the same period last year, from the perspective of overall export data, exports are expected to be in a falling range in the third quarter, and the decline is large, but the key commodities, including clothing, yarn, fabrics and home textile products, have a high chance of achieving double growth. With the decline in the proportion of anti-epidemic materials in the same period last year, the decline in exports in the fourth quarter of this year will rapidly shrink, and it may even return to the same level or growth.

Excluding the impact of accidental events, it is preliminarily expected that exports will achieve a small increase throughout the year. If we take into account the existence of uncertain factors, such as large exchange rate fluctuations, floods in Henan, and repeated epidemics in Europe and the United States, it is more likely to be the same as last year or decline slightly.

In the first half of the year, the trade volume increased by 13.8% year-on-year

In the first half of 2021, the national textile and apparel trade volume was 157.09 billion U.S. dollars, an increase of 13.8% year-on-year, accounting for 5.6% of the country’s total trade volume. Among them, exports were US$143.39 billion, an increase of 12.8%, an increase of 15.6% over the same period in 2019, and accounted for 9.44% of the country’s total exports; imports were US$13.7 billion, an increase of 25.6%, an increase of 13.3% over the same period in 2019, and accounted for 1.1% of the country’s total imports. ; The cumulative trade surplus was US$129.69 billion, an increase of 11.6%, an increase of 15.8% over the same period in 2019, and accounting for 51.6% of the country’s total trade surplus in goods.

In June, the textile and apparel trade volume was 30.56 billion U.S. dollars, a year-on-year decrease of 1.7%, a year-on-year increase of 15%, and a month-on-month increase of 13.1%. Among them, exports were 28.28 billion U.S. dollars, down 3.7%, an increase of 15.1% over the same period in 2019, and 13.8% month-on-month; imports were 2.28 billion U.S. dollars, an increase of 30.9%, an increase of 13.9% over the same period in 2019, and a month-on-month increase of 4.9%. The trade surplus for the month was US$26 billion, a decrease of 5.8%, an increase of 15.2% from the same period in 2019, and a month-on-month increase of 14.7%.

Cumulative exports fell in the second quarter

Since the second quarter, the monthly growth rate of textile and apparel exports has gradually declined. In May, exports fell by 16.8%. In June, exports continued to decline, but the decline was significantly narrower than in May, only 3.7%. Compared with the same period in 2019, it still maintained rapid growth.

Cumulative exports in the second quarter were US$76.93 billion, a year-on-year decrease of 4.9%, of which textiles were the main cause of the decline. Cumulative exports of textiles fell by 27.9% year-on-year, and increased by 17.2% year-on-year. Clothing maintained a good growth momentum, and cumulative exports increased year-on-year. 35.7%, an increase of 10% over the same period in 2019.

The four key markets have different performances

The four major markets of the United States, the European Union, Japan and ASEAN together accounted for 55% of our exports. In the first half of the year, our exports to the United States and ASEAN maintained relatively stable growth, while growth to the European Union and Japan slowed down or declined.

With the gradual recovery of demand, the U.S. market has stabilized, and exports to the U.S. have achieved rapid growth. From January to June, China’s exports to the United States reached US$25.31 billion, a year-on-year increase of 12.8% and a year-on-year increase of 19.4%. Among them, the key commodity knitting and woven clothing increased by 49.4%, down 3.2% from 2019, and basically returned to the level before the epidemic.

The drastic reduction in exports of epidemic prevention materials has led to a sharp drop in China’s exports to the EU. From January to June, China exported 21.22 billion US dollars of textiles and clothing to the EU, a year-on-year decrease of 19.1%. The average monthly decline in the second quarter was as high as 43.2%, which was mainly driven by the rapid reduction of epidemic prevention materials. The export of medical masks and protective clothing to the EU in the second quarter A total decrease of 94%. The export of key commodities knitting and woven garments increased by 24.5%, an increase of 3.7% over 2019.

Subject to the slow economic recovery, the Japanese market demand has not improved significantly, and Japan has taken the lead in resuming the transfer of imports from countries other than China since the second half of last year, which has made my export performance to Japan poor. From January to June, my country’s textile and apparel exports to Japan were US$9.65 billion, a year-on-year decrease of 8.2% and an increase of 6.6% over the same period in 2019. Among them, the key commodity knitting and woven clothing increased by 9.6% year-on-year, down 4.5% from 2019.

Maintain a steady growth in exports to ASEAN, and ASEAN’s share of my country’s exports continues to increase. From January to June, my country’s textile and apparel exports to ASEAN were US$22.73 billion, a year-on-year increase of 36% and a year-on-year increase of 23.5%. Among them, key commodity yarn fabrics increased by 40.8% year-on-year and 6.9% year-on-year. ASEAN's share in my country's textile and apparel export market has further increased to 15.8%, an increase of 2.4 percentage points over 2020, surpassing the EU for the first time.

The overall share of Chinese products in the three key markets has fallen from last year’s high, but still remains at a relatively high level. The share of key products in the European and American markets is still higher than the levels in the same period in 2020 and 2019, and the Japanese market has fallen.

From January to April, the EU’s 27 countries imported US$43.55 billion from the world, an increase of 7%, and imports from China US$14.37 billion, a decrease of 3.9%. China’s share was 33%, down from the same period in 2020 and still higher than the same period in 2019. Among them, textiles accounted for 43.7%, lower than 2020, higher than the same period in 2019, clothing accounted for 28.4%, both higher than the same period in 2019 and 2020. Imports of textiles and clothing from ASEAN amounted to US$5.75 billion, an increase of 35%, accounting for 13.2%, both higher than the previous two years. The status of ASEAN has surpassed Bangladesh and Turkey, the traditional sources of imports from the EU.

From January to May, the United States imported 54.006 billion US dollars from the world, an increase of 24.9%, and imports from China 16.29 billion US dollars, an increase of 10.9%. China accounted for 30.2%, lower than 2020 (34.06%) and the same period in 2019 (30.85%) . Among them, textiles accounted for 36.3%, lower than the same period in 2019 and 2020, and clothing accounted for 27.9%, both higher than the same period in 2019 and 2020. Imports of textiles and clothing from ASEAN amounted to US$14.07 billion, an increase of 37%, accounting for 26.06%, both higher than the previous two years.

The share of Chinese products in the US market has fallen, but the outlook is not very pessimistic. According to the "2021 Fashion Industry Benchmark Report" issued by the American Fashion Industry Association in July, although American buyers continue to reduce their purchases from China, they still regard China as the most competitive and balanced source of procurement. Few countries can achieve the flexibility and sensitivity of China's industrial chain.

Among the US companies surveyed, 63% plan to further reduce their purchases from China in the next two years, which is slightly lower than 83% in 2019 and 70% in 2020. At the same time, 30% of respondents want to maintain the current value of procurement from China, which is significantly higher than 13% in 2019 and 25% in 2020.

From January to May, Japan imported 8.21 billion US dollars from China, down 14.4%, and China accounted for 55.1%, which is lower than the same period in 2020, but higher than the same period in 2019. Among them, textiles accounted for 57.6%, lower than the same period in 2020, higher than the same period in 2019; clothing accounted for 54.2%, both lower than the same period in 2020 and 2019. Imports of textiles and clothing from ASEAN amounted to US$4.42 billion, an increase of 2.9%, accounting for 29.7%, both higher than the previous two years.

The proportion of exports of epidemic prevention materials has dropped rapidly

In the first half of the year, my country’s textile exports totaled US$69.28 billion, a year-on-year decrease of 7%, and an increase of 18.2% year-on-year. Clothing exports were US$74.11 billion, a year-on-year increase of 40.9% and an increase of 13.1% year-on-year.

The export of textile anti-epidemic materials has been shrinking month by month. In June, the total export of medical masks and protective clothing was only 1.15 billion U.S. dollars. The cumulative exports from January to June were 9.02 billion U.S. dollars, a year-on-year decrease of 76.6%.

Excluding masks, textile exports actually increased by 48.8% year-on-year and 11.2% year-on-year; excluding protective clothing, clothing exports increased by 54.4% year-on-year and 11.5% year-on-year.

The overall performance of bulk commodities was good, with yarns, fabrics, home textiles and other textiles other than masks, as well as clothing all achieving growth. Among them, the export volume of knitted garments increased by 37%, an increase of 4.8% over 2019. One of the most prominent ones is sportswear. Under the easing of the epidemic, the export of sportswear (including swimsuits) has grown rapidly. From January to June, China's global exports of sportswear increased by 50.23% year-on-year and 10.8% year-on-year. And since March, the growth rate has expanded rapidly, and the monthly growth rate in the second quarter has reached or nearly doubled. It shows that with the opening of public activities, the global market for outdoor sportswear has rebounded, and even formed a retaliatory growth to a certain extent.

Yarn exports increased by 48.8% and 1.9%, and fabric exports increased by 48.6% and 4.7%.

The proportion of anti-epidemic materials in exports dropped rapidly. In the first half of the year, the total export of medical masks and protective clothing accounted for the total export of textiles and apparel, which has dropped rapidly from 22.4% last year to 6.3%. Among them, the proportion in June has dropped to 4.05% (the proportion in 2018 before the epidemic was 2.5%, and in 2019 it was 2.7%), which is a huge contrast with the proportion as high as 54.2% in May last year. The impact of anti-epidemic materials on the overall export trend has gradually weakened. In the second half of the year, textile and apparel exports will further return to a pattern dominated by traditional bulk commodities.

Note: Masks and protective clothing are all based on China Customs HS 8-digit statistics, and the statistical caliber is slightly larger.

Exports from major provinces and cities are increasing rapidly

In the first half of the year, the top five export provinces and cities all achieved rapid growth, with the exception of Guangdong, which all achieved double-digit growth. Zhejiang, Jiangsu, Shandong and Fujian increased by 18.9%, 11.7%, 28.5% and 35.7% respectively. The growth rates of Hebei, Jiangxi, Xinjiang and other places all reached or exceeded 50%.

Divided by geographic region, the eastern region is still the main force driving export growth. In the first half of the year, the eastern region’s cumulative exports increased by 13.9%, the western region increased by 30.7%, and the central region declined from last year’s high base, down 2.9%.

Import prices of bulk commodities have all risen

Different from the performance of exports falling in the second quarter and showing negative growth for two consecutive months, textile and apparel imports have maintained rapid growth for four consecutive months since March, and their growth rates have exceeded 30% from April to June. Driven the cumulative import growth of 25.6% in the first half of the year, far exceeding exports. Affected by the epidemic, the mobility of international personnel has been greatly reduced, foreign purchases have ceased, and domestic consumers' pursuit of foreign clothing and accessories has driven the rapid expansion of clothing imports.

In the first half of the year, clothing imports increased by 55.1% cumulatively, driving the overall import growth by 19%. The proportion of clothing in imports further rose to 42.5%, an increase of 2.4 percentage points from 2020 and an increase of 6.2 percentage points from 2019.

The cumulative growth of textiles was 10.2%, of which yarns, fabrics and home textiles increased by 44.2%, 14.9% and 29% respectively.

Price increase is an important factor leading to import growth. Among the garments, only the import prices of chemical fiber garments have risen relatively slowly, and the import prices of garments made of other materials have risen by more than 20%, and silk and wool garments have risen by more than 50%. Import prices of yarns and fabrics have also risen to varying degrees.

The monthly import price of cotton hits a record high

From January to June, cotton imports grew rapidly as a whole, with a total of 1.547 million tons imported from the world, an increase of 72.1% year-on-year. Imports from the United States, Brazil, India and Burkina Faso all achieved rapid growth, while imports from Australia fell by 67.2%. In the first half of the year, the average import price was US$1,820/ton, an increase of 4%.

In June, cotton imports were the same as the previous month, with imports of 172,000 tons that month, a year-on-year increase of 90.6%. Imported cotton prices have risen month by month since November 2020, and further accelerated in the second quarter of this year, rising to US$2,040/ton in June, setting a new high since January 2020.

According to the information released by the China Cotton Association, in June, the state continued to introduce measures to strictly control the rise in commodity prices, textile enterprises as a whole maintained a high operating rate, and domestic cotton prices rose steadily. The average price of China's cotton price index (CCIndex3128B) in June was 15,985 yuan/ton, an increase of 35 yuan from the previous month and a year-on-year increase of 4027 yuan/ton. Affected by the rise in bulk commodities, international cotton prices have increased more than domestic prices, and the price gap between domestic and foreign cotton has narrowed compared with the previous month.