Textile industry run stably in the first half of 2018
Nov 15, 2018 ｜ by Flora
The first half of 2018 witnesses sound market demand environment due to accelerated recovery of world economy and steady growth of domestic economy, China’s overall textile garment export and domestic market achieved good growth, to provide fundamental support for steady operation of textile industry. Since the thorough implementation of supply-side structural reform and high-quality development, production and marketing, benefit, investment and other economic indicators in textile industry presents the characteristics of structural adjustment, and the operational quality has improved compared to the first quarter.
The internal and external sales of industry is growing steadily
The textile industry archives overall stable development in the first half year, and the second quarter is better than the first. According to the follow-up survey results of CNTAC’s enterprise operator, the industrial prosperity index in the first year continues to expand, the prosperity index in the second quarter is 60.9, which is 3.6 points higher than the first quarter.
Fig. 1: Prosperity index in textile industry
Data source: CNTAC
Domestic demand market grows stably, and internet channel presents significant increase in growth. According to the data of National Bureau of Statistics, retail sales of clothing, shoes, hats and knitted textiles above the national quota has increased by 9.2% year-on-year, the growth rate has increased by 1.9 percentage points over the same period of the previous year. Online retail sales of clothing items have increased by 24.1% year-on-year, the growth rate has increased by 3.3 percentage points over the same period of the previous year. The domestic sales growth of textile clothing is better than that of last year due to the overall sound development of macro economy and the improvement of resident income on the one hand and remarkable success achieved in supply structure optimization and domestic demand balance in textile industry on the other hand.
Fig. 2: Growth in domestic retail sales of consumer goods
Data source: National Bureau of Statistics
Total exports of the industry maintain growing, and textile competitiveness is stable. Customs Express data show that the total export volume of textiles and apparel (excluding Chapter 94) in the first half of the year is US$ 127.52 billion, with year-on-year growth of 3.2%, and the growth rate is 1% higher than the same period of the previous year. Among them, textile has stable international competitiveness and sound export growth. Its amount of exports has year-on-year of 10.3% in the first half year, the growth rate is 7.2% higher than the same period of the previous year, and the share of total exports rises to 45.7% from 42.8% of the same period of last year. However, garment export faces greater pressure, exports falls 2% year on year, which is 3.4 percentage point lower than the same period of last year, and the share decreases to 54.3% from 57.2% of the same period of the previous year.
Fig. 3: The total amount of growth of textile garment export
Data source: China Customs
Economic benefits have been gradually improved, and operating quality grows stably
Benefit from the sound supporting of domestic and foreign markets, the textile industry indicates a trend of accelerated economic growth. According to the data of National Bureau of Statistics, in the first half year, textile enterprises above state designated scale have achieved a total business revenue of 2906.06 billion yuan, with a year-on-year growth of 4.1%, the growth rate is 1% higher than the first quarter of this year. Total profit has reached to 136.06 billion yuan, with a year-on-year growth of 2.4%, the growth rate is 6.2 percentage points higher than the first quarter. In addition, the benefit growth rate of chemical fiber and textile machinery industry is significantly higher than the average of the whole industry. The prime operating revenue and total profit of chemical fiber industry in the first half year have increased by 16.3% and 19.3% respectively. Besides, the textile machinery industry has increased by 16% and 19.6% respectively.
Fig. 4: Year-on-Year Growth of Textile and Industry-classified Performance Indicators in the First Half of 2018 (above-designated )
Data source: National Bureau of Statistics
Overall operating quality of textile industry has improved. In the first half year, the sales profit margin of textile enterprises above state designated scale is 4.7%, which is 0.1 percentage points slightly lower than the same period of last year and is 0.2 percentage points higher than the first quarter in the current year. The turnover of finished goods is 18.4 times/year, which has been accelerated by 2.6% on year-on-year basis. Besides, the total assets turnover is 1.4 times/year, which is basically the same as the same period last year; the three-fee ratio is 6.9 percent, which is one percentage point higher than the same period of last year and 0.2 percentage points lower than the first quarter of this year.
The growth rate of production slows down steadily, investment increase modestly rises again
The work starts normally in textile industry, and the production growth slows down gradually. According to the data of National Bureau of Statistics, the rate of capacity utilization in textile industry is 81.1% in the first half year, which accelerates 0.4 percentage points compared to the same period of last year; the rate of capacity utilization in textile industry is 81.7%, which reduces 1.2 percentage points compared to the same period of last year. In addition, the industrial added value of textile enterprise above state designated scale has a year-on-year growth of 2.8%, whose growth speed slows down 2.5 percentage points compared to the same period of last year and 0.8 percentage points compared to the first quarter. The industrial added value of textile machinery industry grows fastest in all sub-sectors, which is 13.9% higher than the same period of the first half year. Furthermore, the production growth rate of industrial chain terminal is more stable; the industrial added value of home textiles, industrial textiles and garments have increased by 6.2%, 7.8% and 4.5% respectively.
Compare with the previous statistic section, industrial investment growth modestly picks up. After calculating on the basis of the data of National Bureau of Statistics, the completed investment in fixed assets for textile industry achieves 1.3 percent year-on-year growth in the first half year, the growth, though, slows down by 7.8 percentage points from a year earlier, the negative growth since this year has been finished, and the growth rate rises 4.6 percentage points from the first quarter. Among them, the investment in chemical fiber industry recovers on account of the improvement of benefit. In addition, the investment volume in the first half year increases 28.2% on year-on-year basis, which is 7.9 percentage points higher than the same period of last year and 26.9 percentage points higher than the entire industry.
Macro-fundamentals are generally normal, uncertain factors remain to be observed
As we look to the second half of 2018, the general domestic and international macroeconomic situation continues to recover steadily; the internal and external markets remain growth stably, and the textile industry is also expected to maintain a basically stable operation in the second half of the year. In terms of international aspect, the employment in developed economies has improves, which is close to the level of full employment, and boosts the confidence of consumers. Meanwhile, the international market demand still maintains inertia increase. According to the latest forecast of IMF and the World Bank, the global economic growth rate is 3.9% and 3.1% respectively in 2018, which is not lower than the growth level of 2017; the overseas market demand is generally stable in textile industry. In terms of domestic aspect, China’s macroeconomic performance will remain stable on the whole in the second half year of 2018, and the steady employment growth will provide basic support for income growth and consumption expansion. In addition, consumer confidence is relatively high, which can provide a judgment data for the steady growth trend of domestic demand; domestic demand expansion will be attached greater importance on the basis of macro-control policy, and the domestic consumption in textile and garment is expected to maintain a steady growth.
In the next half year, macroscopic environment will be more complex, and the risk factors will increase; however, it will not have a significant impact on textile industry in general. Since this year, Sino-US trade frictions continue to escalate, the trading environment is more uncertain, and the textile industry also faces greater export pressure. Nonetheless, the raise tax published by American government fails to cover clothing, home textiles and other export products that account for large proportion. Meanwhile, the raised tax has not yet come into effect, hence it is not expected to result in a tremendous impact on textile exports. It still needs some time to emerge the influence of global liquidity contraction and other external risks caused by US interest rate rise, the international market demand trends to ease up in short period, while the fundamentals are unchanged, so the textile industry still faces stale overall external environment.
Operation trend is basically stable, and high-quality development still requires to be boosted
In general, the textile industry will continue to grow steadily under a stable growth environment for domestic demand and external demand. The domestic sale will still have a sound development, and the export pressure will be increased, however, the growth is expected to be only modest compared with the first half of the year, there is still room for a rebound of performance quality indicators in textile industry because of base reason.
Facing with more complicated external situation, the core development mission in textile industry is to deepen transformation and upgrading, accelerate high-quality development. For textile industry, the spirit of 19th CPC national congress and central economic work conference will be carried out thoroughly, supply-side structural reform will be further promoted, to accelerate industrial transformation and upgrading, and to pull off steady growth and quality improvement.
(Source: Industrial Economics Research Institute of CNTAC)
