Textile and Clothing Trends Drive China's Cotton Demand
Developments in the Chinese textiles and clothing industries are impacting the country's cotton demand.
March 27, 2009
Over the last five years since joining the World Trade Organization (WTO), China’s cotton textile industry has maintained a healthy, stable, and rapid development. The output of major projects observed a fast growth; the overall quality has steadily advanced in the economic operation of the industry; the industrial structure has been further regulated; the capability for product innovation has been elevated; and the industrial chain have been increasingly consolidated.
The growth of China’s demand for cotton products at an annual average rate of 16% is a major motivator for the development of China’s textile industry, as is the constant growth of cotton product exports.
Driven by the growing local and export demand, the corporate structure, market structure, and product structure of China’s cotton products has improved.
With the structural adjustment and technical progress of the textile industry, China’s capacity of cotton products has increased greatly. Exports of cotton products reached $59.997 billion (USD) in 2006, up from $21.6 billion in 2002.
As the quality of China’s textile products have risen, the export ratio of cotton products in normal trade also has increased. In addition, with the continuing reform of the economic system, private enterprises have become major forces in China’s export market.
This improvement in quality can also be seen in China’s export partners. China’s share of the export markets of the U.S. and European markets has increased from 13.5% in 2002 to 24% in 2006. This also has meant a shift toward more sophisticated products, such as clothing. Currently, technical reform is stressing adjustments to product structure, raising the grade of products as well as raising the ratio of “three-nil and one fine” products.
In 2006, the non-beating ratio of the cotton textile industry has been raised to 56.6%; blowing-carding plain wool ratio is 40%; and the share of shuttleless looms is 36.5%.
Problems and Solutions
China’s gap between cotton supply and demand will continue to exist for a long period of time. In addition, production costs will increase, and the Chinese RMB will be re-valued. The government’s macro-economic policy is positioned to improve processing trade policy and to optimize the country’s export structure and reduce the trade surplus.
China also will face increased competition from the cotton textile industries of neighboring countries, which are rapidly improving. And as always, protectionism in trade in many different world markets continues to pose a considerable challenge for Chinese exports.
Recalling the past five years, China’s competitive “dance with wolves” has kept the textile industry growing rapidly in competitive markets. However, in the future, bigger and deeper problems will be encountered.
With the scientific development concept pursued in China, the industry will take the lead to adjust the structure of raw materials to energetically develop and apply differential fibers, recycled fibers, non-cotton natural fibers and other new fibers. It will also increase its investment in its independent branding, innovation, and research and development.
Through these means, China can raise the added value of its products, accelerate technical reform, strengthen its corporate core competitive strength and try to change from number-growth mode to quality and beneficial economic growth mode so as to keep China’s cotton textile industry on a healthy path of development.
The following article is drawn from a presentation delivered by Lanfen Zhu at the 2007 China International Cotton Conference in Urumqi, China. Mr. Zhu is with the China Cotton Textile Association.