Industry Data: Decline In External Demand, Decrease In Orders, How To Break Through In Extreme Weather Textile And Clothing

Under the influence of declining external demand, order reduction, extreme weather and last year's high base, China's textile and clothing exports fell again in July. In dollar terms, textile and clothing exports in July were 27.11 billion US dollars, down 18.3% year on year and up 0.5% month on month, of which textile exports were 11.15 billion US dollars, down 17.8%, down 3.6% month on month, and clothing exports were 15.96 billion US dollars, down 18.7% and up 3.5% month on month.

July August may be the "pressure moment" of textile and clothing exports this year. The China Chamber of Commerce for Textile Imports and Exports expects that with the emergence of subsequent positive factors, the dawn of recovery will appear. First, the US economy is still resilient in the near future, the inflation rate has continued to decline, and inventories have declined year-on-year, forming a good expectation for China's exports. From the third quarter of 2022 to the second quarter of 2023, the annual rate of U.S. GDP was 3.2%, 2.6%, 2.0% and 2.4%, respectively, returning to a positive growth trend. The year-on-year growth rate of CPI in the United States in July has dropped to 3.2%, and the manufacturing inventory in June fell 0.3% year on year. Second, the year-on-year base gradually declined. In 2022, except for August, which is still high, the export volume from September to December will shrink to less than 30 billion dollars, with negative year-on-year growth in each month, and the decline will expand month by month. The cumulative growth in the third quarter will be 5.6%, and the cumulative decline in the fourth quarter will be 14.6%, leaving room for the rebound of textile and clothing exports in the fourth quarter of this year.

The China Chamber of Commerce for Textile Import and Export believes that the industry needs to be confident and wait for the opportunity. The domestic economy is still in the stage of adjustment and recovery, the global economy is recovering slowly, market demand will not recover quickly in the short term, and the negative effects of geopolitical factors are continuing to emerge. In view of the new difficulties and challenges faced by the current economic operation, recently, relevant ministries and commissions have intensively introduced a series of policies to stabilize growth in terms of expanding domestic demand for consumption, stabilizing the private economy, improving the business environment, enhancing foreign investment, and boosting confidence in the capital market, so as to boost the expectations and confidence of market players. At this time, our textile and clothing export enterprises need to "strengthen confidence, stability and promote upgrading", strengthen their internal management, rapidly adjust their business strategy according to the changes in the situation, keep old customers, open up new customers, test new products and new trade methods, build a double cycle combination, expand cross-border e-commerce channels, layout new tracks, and break through the red sea of fierce competition at home and abroad.

Trade data

From January to July, China's textile and clothing trade volume reached US $181.67 billion, down 10.5% year on year, including US $169.79 billion in exports, down 10.4% year on year, and US $11.87 billion in imports, down 11.7% year on year. The accumulated trade surplus was US $157.92 billion, down 10.3%.

In July, China's textile and clothing trade volume was US $29.01 billion, down 17.2% year on year, including exports of US $27.11 billion, down 18.3% year on year, and imports of US $1.89 billion, up 2.3% year on year. The trade surplus in July was US $25.22 billion, down 19.5% year on year.

　 Trade characteristics

The textile and clothing trade from January to July 2023 presents the following characteristics:

1、 The world economy recovered slowly, and exports increased slightly month on month in July.

The global economic recovery is slow, and the growth of developed economies is sluggish. The US economy grew by 2.4% in the first half of this year, the EU economy grew at zero month on month in the second quarter of this year, and Germany, the leader of the EU, grew at a negative month on month rate. The Bundesbank predicted that the German economy would continue to stagnate in the third quarter. International demand continues to shrink, orders decline, and China's textile and clothing exports continue to bear pressure. In July, China's textile and clothing exports reached US $27.11 billion, a slight increase of 0.4% month on month, but a significant decrease of 18.3% year on year, expanding for two consecutive months.

2、 The share of Europe, America and Japan in China's export market has rebounded.

In July, my exports to the three traditional markets of the EU, the United States and Japan totaled US $10.56 billion, accounting for 38.95% of my total exports. From the cumulative data from January to July, China's exports to Europe, America and Japan totaled US $59.43 billion, accounting for 35%.

According to the export data in July, Central Asia, Russia, West Asia and Africa are still the highlights of China's textile and clothing exports. Among the markets whose exports exceeded US $100 million this month, six countries saw year-on-year growth, namely Kazakhstan (22.75%), Russia (13.31%), Turkey (0.73%), Iraq (4.37%), Algeria (118.15%) and Tanzania (12.99%).

According to the data from January to July, among the 45 countries and regions whose exports exceeded US $700 million, 12 countries such as South Korea, Kyrgyzstan, Russia, Malaysia, Kazakhstan, Saudi Arabia, Brazil, Singapore, Turkey, Iraq, Algeria and Tanzania maintained growth.

ASEAN: Affected by the transmission of declining demand from Europe and the United States, the growth momentum of China's export to ASEAN continues to weaken. In July, China's export to ASEAN was 3.8 billion US dollars, down 19.3% year on year, exceeding the overall decline of China's export. Among them, the export of yarn and fabric was 1.81 billion US dollars, down 20.8%. By country, China's export to Vietnam in July was 1.32 billion US dollars, down 8.3%, and the decline narrowed significantly. From January to July, the cumulative export to ASEAN was US $29.19 billion, down 9.5%, of which the cumulative export of yarn and fabric was US $14.36 billion, down 16.2%; Clothing exports reached 9.11 billion US dollars, up 7%.

US: Exports to the US continued to decline. In July, exports to the United States reached 4.7 billion US dollars, down 24.1% year on year. Among them, the export volume and price of the key commodity knitted and tatting clothing fell in the same month, with a year-on-year decrease of 25.9% in the amount, 18.3% in the export volume and 9.4% in the average export price. From January to July, China's exports to the United States totaled 26.67 billion US dollars, down 20.5% year on year, of which the total exports of knitted and tatting clothing were 16.62 billion US dollars, down 20.8% year on year, mainly because the export volume fell 20.4% year on year, and the average export price fell 0.4% year on year. It can be seen that the decline in exports to the United States is mainly caused by the decline in exports.

EU: The economic growth of the EU is sluggish, the economy of Germany, the leader, continues to be depressed, and China's exports to the EU continue to decline. In July, China's exports to the EU reached 4.36 billion US dollars, down 27.3% year on year, the largest drop among the three traditional markets in Europe, the United States and Japan; The month on month decline was 3.8%, which was the only month on month decline among the three major markets. The export volume of knitted and tatting clothing, a key commodity, was 2.92 billion US dollars this month, down 30.9% year on year, of which the export volume was down 23.5%, and the average export price was down 9.6% year on year. From January to July, exports to the EU totaled US $23.17 billion, down 20.7% year on year. The export volume of knitted and tatting clothing, a major commodity, was US $14.16 billion, down 22.4% year on year, and the export volume and average price were down 14.3% and 9.5% year on year respectively.

Japan: Japan's economic growth was better than expected. The report released by the Japanese Cabinet Office showed that Japan's economy grew by 6% in the second quarter. The economy recovered and people's willingness to consume increased. In July, China's exports to Japan reached US $1.5 billion, down 13.8% year on year, narrowing for two consecutive months (25.5% in May and 19% in June, respectively), and increasing by 30% month on month. The daily export of knitted and tatting clothing of major commodities was $990 million, down 10.2% year on year, of which the export volume was down 5.1% year on year, and the export unit price was down 5.4% year on year. From January to July, China's exports to Japan totaled US $9.59 billion, down 10.8% year on year, including US $6.18 billion of knitted and woven clothing exports to Japan, down 9.3% year on year. The export volume was too difficult to decline 5.3%, and the average export price fell 4.3% year on year.

From the import data of key markets in June, the demand in Europe and the United States continued to fall sharply, while the decline in Japanese demand slowed down. The imports of the United States and the European Union from China, 10 ASEAN countries and 3 South Asian countries (India, Bangladesh, Pakistan) have all declined significantly, and the decline in imports from China is lower than the other two; Japan's imports from China have declined significantly, and imports from ASEAN and South Asia have increased. The trend of procurement chain transfer is more obvious than that in Europe and the United States, and the speed is faster.

3、 The export prices of four major categories of commodities declined.

In July, the export volume of yarn, fabric, household textiles and knitted and tattered clothing of the four major commodities declined by 16.2%, 17.6%, 12.7% and 19% respectively. Prices fell across the board by nearly or more than 10%, including 9.9% decline in fabric prices and 15.8%, 13.8% and 11.8% respectively in yarn, household textiles and needle woven clothing. From the perspective of export volume, except for household textiles, which increased by 1.4%, the export volume of the other three categories of commodities declined, with yarn declining by 0.6%, fabric declining by 8.3%, and knitted and tattered clothing declining by 8.1%.

From January to July, the cumulative export of textiles fell by 12.2%, and the export of clothing fell by 8.8%. The export volume of the four major categories of goods all declined, of which the intermediate yarn and fabric declined by 12.9% and 12.2% respectively, while the final consumer goods, household textiles and needle woven clothing, declined by 3.8% and 8.9% respectively. The export prices of the four major categories of commodities fell across the board, with yarn prices falling the most, 20.1%; The prices of fabrics, household textiles and knitted and tattered clothing fell by 7.8%, 4.5% and 2.1% respectively. In terms of export volume, yarn and household textiles increased by 8.7% and 0.7% respectively, while fabrics and knitted and tattered clothing decreased by 4.8% and 7% respectively.

4、 In July, the decline in Jiangsu, Guangdong and Fujian narrowed.

In July, under the influence of insufficient market confidence and the high base effect last year, textile and clothing exports of major provinces and cities continued to decline. Among the top six provinces and cities, Zhejiang declined 13.82% year on year, Shandong declined 9.19% year on year, less than the average. Jiangsu, Guangdong, Fujian and Shanghai declined 22.7%, 18.4%, 28.3% and 28.3% year on year, respectively. The highlight is border provinces, with Xinjiang and Guangxi growing by 8% and 17.6% respectively year on year.

From January to July, 9 of the 31 provinces (cities and districts, excluding Hong Kong, Macao and Taiwan) in China maintained growth, among which Xinjiang (48%), Guangxi (104%), Sichuan (32%), Heilongjiang (48%) and Guizhou (61%) increased significantly. Among the top six key regions, Zhejiang, Jiangsu, Guangdong, Shandong, Fujian and Shanghai declined by 8.1%, 19%, 15%, 10.3%, 21.7% and 14.5% year on year respectively, with a decline of 1-3 percentage points more than that of last month.

In terms of imports, imports of some major provinces and cities stopped falling and recovered in July, including Zhejiang (- 9.2%), Guangdong (1.6%), Jiangsu (- 10.2), Zhejiang (16.4) and Fujian (217.5%).

From January to July, the import of major provinces and cities all declined, but the decline was smaller. The cumulative decline of import in Shanghai, Guangdong, Jiangsu, Zhejiang and Fujian was 0.3%, 2.3%, 1.4%, 4.1%, 14.2% and 2%, respectively.

5、 The sharp increase in yarn imports has driven the overall import to achieve its first growth in the year.

In July, for the first time in the year, the import of textiles and clothing increased by 2.3% in the same month, which was mainly driven by the growth of textiles. In July, textile imports reached 1.06 billion US dollars, up 16.1% year on year. Among them, the import volume of yarn increased by 72.8% year on year, mainly driven by the import volume. The import volume of yarn in that month increased by 98.6% year on year, and cotton yarn was the main force of the import volume increase. The import volume of fabrics and manufactured goods decreased by 19.3% and 11.5% respectively year on year.

In July, clothing imports were 836 million dollars, down 11.2% year on year, 4 percentage points less than that of the previous month. Among them, the import volume of knitted and tatting clothing decreased by 6.6% year on year, the import volume decreased by 12.1% year on year, and the unit price increased by 6.3% year on year.

From January to July, textile and clothing imports totaled US $11.87 billion, down 11.7% year on year. Among them, textile imports were US $6.4 billion, down 15.4% year on year, and clothing imports were US $5.47 billion, down 7.1% year on year. The accumulative import volume of yarn, fabric and knitted and woven clothing of major commodities decreased by 4.7%, 5.4% and 12.3% respectively year on year. The unit price of yarn import decreased by 10.5% year on year, the unit price of fabric import decreased by 14.1% year on year, and the unit price of needle woven clothing import increased by 8.9% year on year.

6、 The domestic cotton price has set a new annual high, and the difference between domestic and foreign cotton prices has widened.

In July, China imported 110000 tons of cotton, up 32% month on month and down 7.1% year on year. The average import price was 2090 US dollars/ton, down 25.9% year on year and 6.7% month on month. From January to July, China imported 683000 tons of cotton, down 45.5% year on year; The average import price was 2250 US dollars/ton, down 13.1% year on year. Among them, imports from the key import regions of the United States, Brazil and Egypt decreased, and imports from Australia increased by 657% year on year.

The import volume and price of chemical fiber continued to decline. In July, the import volume fell 8.8% year on year, and the average import price fell 11.6% year on year. In the first seven months, the import volume dropped 12.7% year on year, and the import price dropped 4.7% year on year.

According to the information released by the China Cotton Association, most of the cotton in the country was in the flowering period in July, and the overall growth was better than expected. Influenced by the high temperature weather in the main cotton producing areas of the Northern Hemisphere, which led to increased production reduction expectations and tight supply expectations, cotton prices at home and abroad maintained a strong trend. On July 24, China's cotton price index (CCIndex3128B) rose to 18070 yuan/ton, a new annual high; On July 31, China's cotton price index (CCIndex3128B) was 17998 yuan/ton, up 4% month on month; The average monthly price was 17757 yuan/ton, up 2.8% month on month and 6.6% year on year; In the same period, the monthly average price of the Cotbook A index was 93.2 cents/pound, up 0.8% month on month, down 40% year on year, and the tariff price of 1% was 16437 yuan/ton, 1320 yuan lower than the domestic cotton price.