Grasping opportunities of strategic importance and steadily heading towards high-quality development of textile industry

The Central Committee Economic Work Meeting of 2018 clearly pointed it out that Chinas development is still at the stage of strategic importance， which should turn crises into opportunities and dangers into safety. Meanwhile， efforts should be made to accelerate the optimization and upgrade of the economic structure， improve the technological innovation capability， deepen Chinas reform and opening-up policy， speed up green development， and participate in the global economic governance system reform， and turn pressure into the driving force to promote high-quality development of the economy in accordance with the new connotations of the strategically important opportunities.

2019 marks the 70th anniversary of the founding of New China and also a critical year for China to realize the objective in the first 100 years of building a moderately well-off society.

In 2019， Chinas textile industry， after experiencing four decades of baptism since the reform and opening-up， will embrace another period with strategically important opportunities and also a critical year for industrial expansion.

As the Chinese saying goes， “take advantage of a favorable situation immediately rather than let it go”. In an era where crises and opportunities coexist， to overcome crises is to create opportunities； to lose opportunities is to create crises. Globalization of production， trade， finance， and investment has not only fueled the cross-border flow of goods capitals， but also resulted in conflicts and integration of culture， lifestyle， value concepts， and ideologies.

On the one hand， to accelerate the optimization and upgrade of the economic structure， improve the technological innovation capability， deepen reform and opening-up， intensify the ecological civilization construction capacity， and participate in the global economic governance system will create the best development opportunity for Chinas textile industry to further expand and strengthen itself. On the other hand， the pressure facing high-cost enterprises has not yet been alleviated； the domestic electricity and labor cost is still high； enterprises still have great difficulty in financing or cannot afford financing； the replacement of business tax with value-added tax plays a limited role in reducing the tax burden facing textile enterprises； and the international competition has been intensified. All these objective problems have deepened the uncertainty of the development of Chinas textile industry.

Overview of Chinas textile industry in 2018

In retrospect of the past one year， one can observe a significant improvement of the supply-front structural reform effects of Chinas textile industry， which was mainly reflected as optimization of the supply structure， encouraging growth of profits， continuous upgrade of the industrys adaptability and flexibility towards demand changes， stabilization of the domestic and overseas market performance， and steady upregulation of indexes to drive investments and profits. On the whole， the keynote for the industrys steady operation has not been changed.

However， the external environment facing the whole industry experienced dramatic changes. Chinas economic development model was ushered from the high-speed growth period to the high-quality development period. The growth rate of some macroeconomic indexes slowed down， and the domestic demand growth was also on a downward trend. At the same time， the global free trade system was destroyed， leading to the worsening of the trade environment， dampening of the consumer confidence， and growing of international investment risks. All these problems constitute the major risks facing Chinas textile industry. It became an imperative for Chinas textile industry to speed up high-quality development and keep on enhancing its resistance to risks.

Maintenance of a steady development keynote

Favorable performance of the domestic and overseas sales market

Since early 2018， Chinas textile apparel sales growth had been obviously faster than that in 2017 and 2016， respectively， and satisfactory progress had been made in enhancing the industrys effective supply. According to statistics of the National Bureau of Statistics， the retail amount of shoes， apparels， hats， and knitwear products above the national quota reached 1.2198 trillion yuan， registering a year-on-year increase of 8.1%， and the growth rate was 0.5% faster than that of the year before. The online retail maintained a fast growth. From January to November， the online retail of apparels grew by 21.2% compared with the same period last year， and the growth rate was 3.2% faster.

Textile apparels still demonstrated a steady competitiveness on the international market. In 2018， there was a continuous rise on the export market of Chinas textile industry.

According to bulletins of China Customs， the export volume of Chinas textile apparels totaled at 253.958 billion USD from January to November 2018， increasing by 4.4% compared with the same period last year， and the growth rate was improved by 2.8%. Among them， the textile product export reached 109.302 billion USD， which was 9.3% higher than the same period last year， and the growth rate was 5.3% higher than that of last year during the same period. The export of apparels reached 144.656 billion USD， increasing by 0.9% compared with the same period last year， and the growth rate rose by 1%.

Stabilization and slowdown of industrial investments

In 2018， Chinas textile industry experienced an adjustment of its overall investment structure， and the investment growth rate was further stabilized. According to data calculation of the National Bureau of Statistics， the actualized amount of fixed-asset investments from January to November 2018 increased by 5.4%， which， if compared with the same period last year， dropped by 0.9%. Analyzed by subsidiary industries， the figure for textile industry increased by 4.9%； the figure for the chemical fiber industry was 34.9% and the fast growth sustained for eight months； however， there was a drop of 1.9% in investments into the apparel industry.

Affected by a rising manufacturing cost and tightening supervision of environmental protection， some provides where industrial clusters gather slowed down their investment growth. For example， the traditional textile provinces， such as Guangdong， Zhejiang and Shandong， all witnessed a drop of investments. On the contrary， benefiting from industrial policy adjustments， Xinjiangs textile industry enjoyed a rapidly-growing investment.

Gradual increase of profit margin

Driven by a favorable market performance and steady investment growth， the textile industrys profit margin also increased gradually. From January 2018 to October 2018， the operating income of textile enterprises above the designated scale reached 4.68268 trillion yuan， which was 4.1% higher than that of the same period last year， and the growth rate accelerated by 0.02% compared with the first half of this year. The actualized profits totaled at 222.12 trillion yuan， registering a year-on-year increase of 7.7%， and the growth rate was 5.3% higher than that of the first half of this year.

The operation quality of the textile industry basically reached a stabilization， with its profit margin and capital turnover efficiency considerably improving. From January 2018 to October 2018， textile enterprises return on textile sales reached 4.74%， increasing by 0.16% compared with the same period last year. The total asset turnover ratio was 1.3 times per year， registering a slight improvement compared with the same period last year.

Complex and grim external environment

Obscurity of market demand

Currently， Chinas economy is experiencing a transformation from the high-speed growth period to the high-quality development period. Considering the severe domestic and overseas business environment， the market is expected to experience a downhill， and the prospect for consumption demand is not promising.

In the domestic market， the basis to fuel the growth of consumption demand was weakening. In the first three quarters of 2018， the per capital residents disposal income increased by 6.6% accumulatively， which dropped by 0.9% compared with the same period last year. The profit growth rate of enterprises above the designated scale fell faster than that of the year before， which could not vigorously support professionals salary growth. Since the second half of 2018， the domestic confidence index had also dropped compared with the first half of 2018.

In terms of the international market， though the export of Chinese textile apparels to the United States， EU and Japan increased compared with that in the first half of the year， some analysis institutions though that chances were high for the American economy to experience a downturn， and that， due to weakening of the role of tax reduction and fiscal incentives in stimulating economic development and consumption， the consumption growth might be slowed down. The EU， though remaining on the track of economic recovery， was faced with the aggravation of division among its member countries. As the governments of EU countries tightened up their monetary policies， the role of monetary policies in boosting consumption would be weakened. In the third quarter， Japans GDP experienced the second negative growth， so was the individual consumption. The risk of deflation was not beneficial to the acceleration of demand growth in the next period.

Growing uncertainty in the trade environment

In 2018， the Sino-US trade moved ahead among twists and turns. Recently， American and Chinese leaders reached an initial consensus on trade and economic issues on the G20 Summit. The two sides decided to stop their trade restrictions， such as tariffs， imposed on each other. The American government announced its postponement of the measure to increase the tariff which was previously to be launched on January 1st， 2019. At present， the export data of Chinas textile apparels has not yet demonstrated the influence of increasing tariff. The positive information delivered through the conference would also stabilize the confidence of the industry and enterprises. It was predicted that the trade frictions would have a limited influence on Chinas textile industry. If the two sides failed to reach an agreement on intellectual property right protection and compulsory technology transfer， the tariff imposed on the 200 billion USD on products exported to the United States would increase from 10% to 25%. Export of textile products for the industrial use， including carpets， to the United States would account for a large percentage in Chinas total export. The influence required a timely evaluation， and relevant export enterprises had received a heavy blow. The unilateral trade protectionism initiated by the United States was in line with the international trade development style of the United States in the history. Currently， the trade deficit of the United States to China reaches around 50%， and the ratio of Chinas GDP to the GDP of the United States has exceeded 60%. The United States is creating difficulties for development of Chinas international trade by preventing technological transfer to China， curbing upgrade and development of relevant industries in China. Despite of the consensus reached between leaders of the two sides recently， risks still exist in full stabilization of Sino-US trade and economic relations in the long-term.

At the same time， Chinas textile industry was still faced with competition pressure from Cambodia， Bangladesh， Vietnam， Pakistan， India， Sri Lanka and so on， leading to a growing uncertainty of the trade environment.

In 2018， in spite of the growing complexity and risks of the domestic and overseas macroscopic environment， they were unlikely to exert a huge impact on Chinas textile industry in the short term. Though the trade environment was still beset by a growing uncertainty， and textile enterprises order-receiving stability had been directly influenced， the tax-raising list issued by the United States had not yet covered products， such as apparels and home textiles， taking up a large percentage in Chinas export structure. It was expected that the tariff increase of the United States was unlikely to deal a heavy blow to the export performance of Chinas textile industry. On the whole， Chinas textile industry maintained a steady development momentum throughout 2018， and the total export volume of textile apparels would hopefully surpass 4%. The operating income of textile enterprises above the designated scale would increase by around 5% compared with 2017， and the total profit margin would be 7% higher than that of last year.

In 2019， the world economy will still make a slow recovery， but risks， including liquidity shrinkage caused by the interest rate increase of USD and aggravation of the American trade protectionism would ex- ert a significantly negative influence on the global economic growth. According to the latest report issued by IMF in October， the predicted value of the global economic growth rate in 2019 might downregulate from 3.9% to 3.7%. The growth rate of various economies will also be downregulated correspondingly. The slowdown of the international market demand will become more and more obvious. Affected by changes of the external environment， Chinas macroeconomy will be faced with a growing pressure， and the Sino-US trade frictions will draw more and more attention. At the same time， problems， including the rising cost of factors of production， growing pressure of environmental protection， difficulty and high cost of financing will still exert a long-term influence on the development of Chinas textile industry. In addition， shortage of cotton supply and import quota policies will also influence the steady operation of the whole industrial chain. On the whole， the domestic and foreign market environment facing Chinas textile industry will be on the whole steady but potential changes are unavoidable. Various risk factors will also increase， and the operation pressure will be aggravated compared with that in 2018. The whole industry will deepen its supply-front structural reform， endeavoring to seek progress and improve quality among steady industrial development， and make due contributions to Chinas building of a comprehensively and moderately well-off society.

Several key aspects worth attention of the textile industry in 2019

The central committee work meeting in 2018 clarified the objective of “six stabilizations”， including stabilization of employment， stabilization of finance， stabilization of foreign trade， stabilization of investment， and stabilization of forecast， at an attempt to boost the market confidence， and strengthen the masses sense of gain， sense of well-being， and sense of security， maintain a sound and sustainable development of economy and general social stability， lay a decisive foundation for comprehensive construction of a moderately well-off society， and celebrate the 70th anniversary of the founding of the Peoples Republic of China. Correspondingly， Chinas textile industry should also adhere to these “six insistences”to promote its future development， including sticking to a general work keynote of seeking progress steadily， sticking to the new development concepts， sticking to promotion of high-quality development， sticking to the supply-front structural reform as the main line， sticking to deepening of market-oriented reform， expansion of high-level opening to the outside world， sticking to intensifying the textile industrys role as a bellwether of Chinas openingup to the outside world， a pioneer of the economic system reform， and the industrial position in the industrialization process. By doing so， Chinas textile industry will make multidimensional and historical contributions to all-around and pioneering development.

This requires further inheritance of the dialectical and empirical development thinking， and profound examination of development contradictions of inadequacy and imbalance in the upgrade and transformation process. Proceeding from the perspective based on the unity of opposites， quality interconversion， and negation of negation， Chinas textile industry should not only observe the existing crises and be prepared against rainy days， but also take the initiative to discover hidden opportunities， actively seek expansion， get rid of the stereotyped industrial image of low cost， high pollution， and labor intensification， highlight new tags， including“technology， fashion and green” in Chinas textile industry， and shape the innovation-driven technology industry， accountability-oriented green industry and cultural-oriented fashion industry.

As the Chinese saying goes， “The more you know， the more likely you will act with a determined mind； the more determined you are in your action， the more likely you will gain a deeper understanding”. In 2019， China National Textile and Apparel Council will profoundly understand and implement the spirit of various central committee economic work meetings under the guidance of the socialist ideas with Chinese characteristics proposed by President Xi Jinping for the new era. Meanwhile， the Council will stick to the general keynote of seeking progress among steady development， firm up determination and maintain composed， enhance foreseeability and targetedness， and revolve around the concept of “technology， fashion and green”to promote high-quality development of Chinas textile industry.

Providing favorable government decisionmaking support， and creating a sound development environment for the textile industry

Considering the concentrated distribution of privately-employed enterprises and SMEs， China National Textile and Apparel Council has pinpointed the objective of strengthening the endogenous driving force of economic development and promoting entrepreneurship innovation and employment expansion to deepen industrial research and to provide bases for scientific decision-making of government departments.

Clarifying the industrial development situation and corporate operation status. Creating a fair business environment. Introducing government policies of tax and fee reduction， financing service improvement and innovation capability enhancement to accelerate the entry of SMEs innovational products and services into the market. Supporting enterprises participation in construction， key and core technological breakthroughs and national standard formulation of national technological innovation centers and national key labs.

Paying close attention to the new development of the international environment， such as Sino-US trade conflicts， and reasonably judging the overall development status.

Winning three tough fights and serving the national strategic development pattern

Revolve around three tough fights to guard against and resolve major risks， cope with poverty and do a good job in pollution prevention and treatment. Precisely find out combination points of the industry work in response to key problems and breakthroughs. Promote steady development of the industry， and ensure the industry to play a bigger role in stabilizing employment， finance， foreign trade， investment and expectations.

To be specific

Promoting industry poverty alleviation， regional coordination and rural reinvigoration based on employment promotion and industrial transfer. Deepening the industrys social responsibility in energy conservation， emission reduction， decreased use of toxic and poisonous chemicals， and standardization of intellectual property right protection and corporate credit construction. Guiding the industrys optimization of production capacity and developing the green supply chain；

Carrying out the key task of the national governments promotion of all-around opening-up and reform. Regarding international conferences and professional exhibitions as platforms and cooperating on international production capacity to promote the industrys further opening-up to the outside world as well as the “Belt & Road” construction；

Deepening the civil-military integration in Chinas textile industry， improving the connection between services and resources， and boosting research and compilation of standards for textile products for military use.

Propelling high-quality development and industrial service

To promote high-quality development of the manufacturing industry is on the top agenda of the seven key tasks pinned down by the central committee economic work conference. Revolving around the supply-front structural conditions in the textile industry， market-oriented and rule-oflaw methods will be adopted to enhance “consolidation， intensification， promotion and smoothening”， and promote coordination， optimization and allocation of resources. With the horizontal and vertical development of services， the textile industry will also achieve its high-quality development.

To be specific：

Propelling in-depth integration between the advanced manufacturing industry and modern service industry of the textile industry. Deepening the cooperation between industrial capitals and financial capitals to serve the real economy and address practical problems facing the privately-employed enterprises and SMEs. Actively leading enterprises to participate in the industrial investment and financing policies and plans. Further implementing the “Three-year Action Plan for Integration between Industrial Capitals and Financial Capitals of the Textile Industry，” building a database of key enterprises， promoting the connection between production capitals and financing capitals， pay more attention to the development of the technology growth enterprise market， and leading enterprises to list themselves on the market；

Promoting formation and development of new technologies， new organizational charts， and new industrial clusters. Further improving the public service platforms for SMEs， stimulating the microscopic subjectsvigor， and combining strengthening and expansion with specialization. Boosting coordination among the industry， university and scientific research institute， and connect enterprises of the small size， medium size and large size. Concentrate on enhancing enterprise technological innovation capability， and building an open， coordinated and efficient shared technology R&D; platform. Improving the integrated innovative mechanism for the industry， university and research institute oriented towards demand and with enterprises at the core；

Accelerating the cultivation of world-class advanced textile industrial clusters. Matching professional meetings， characteristic activities and clusters in a targeted way to help clusters expand their market and influence， and to introduce industrial genes into construction of characteristic small towns.

Promoting coordinated regional development and strengthening technology and brand construction

Promote the West China Grand Development， Northeast Comprehensive China Revitalization， Emergence of Central China， and Pioneering Development of East China based on two important value leverages — technology and brand construction. Accelerate urbanization， and lift the fine management level， high added-value and cognitive development of industrial clusters to a new level.

To be specific：

Deepening the technological service and talent construction in the textile industry. Leading innovation of key industrial technologies through academic meetings， technological promotion， achievement verification， specialized rewards， standard cultivation and innovation alliance. Actively propelling R&D; and industrialization of high-performance， functional， and ecological fiber materials. Developing intelligent manufacturing of the textile industry， and promoting intelligentization of products， manufacturing and operation. Developing environmentally-friendly technologies， including green printing and dyeing， and comprehensive utilization of waste textile products；

Intensifying the technological and talent construction in the textile industry. Accelerating cultivation of manufacturing brands， consumption brands and regional brands based on masters， major brands and major events. Deepening research into the industrial culture and traditional culture. Releasing cultural trends and improving fashion design capability. Upgrading the brand service system， strengthening and optimizing activities， including China Fashion Week， and increasing the say of Chinas textile industry in the fashion world；

Improving the level of the industrial chain via technology and brand. Laying emphasis on technological innovation and economies of scale to form new competitive advantages. Striving to satisfy terminal demands， improve the product quality an consumption ability， and ensure comfortable wearing or using experience for consumers.

As the Chinese saying goes， “A boat can drive faster if following the water flow. A person will not get lost if keeping on the road”. By inheriting the reasonable work direction and scientific development objective， and revolving around “technology， fashion and green”， we should be good at summarizing experience， deepening ideological thinking， and exploring development rules to bring in a new development pattern. At the same time， we should work down-to-earth to position major contradictions in the development process of the textile industry， plan major tasks for industrial services， clarify the goals， establish a long-term platform mechanism for system development， enhance the awareness of crisis， maintain a strategic mind， and forge core advantages. All this can help us shape a new supply pattern which gives priority to the efficacy of the textile industry and centers on quality； a new interest pattern targeting at common development， sharing of achievements and win-win cooperation； a new cooperation pattern oriented towards “import and export of quality goods and services”， interconnection and mutual inclusiveness and opening； and a new ecological pattern with green waters and mountains and advocating sustainable development.