Chinese textile sector bears brunt of Sino-American trade war; eyes on G20 summit in Osaka now

by Apparel Resources

01-July-2019  |  4 mins read

Chinese Textile Industry
Image Courtesy: scmp.com

Suzhou, often referred to as the birthplace and capital of the Chinese textile industry, is going through hard times, thanks to the ongoing trade war between China and USA.

Traditionally a thriving manufacturing city with a heavy reliance on exports, with Wujiang, Suzhou’s largest district which is also home to Suzhou Jinzhu, the base for some of the largest fabric manufacturers in China, the textile sector today is a shadow of its glorious past.

“The textile industry is facing an unprecedented situation, and our production and operations have become difficult… As for future orders, it depends on whether the US is sincere about engaging in fair negotiations…,” underlined a notice issued by a company asking its staff  to go for a month’s holiday, adding further that holiday could be extended.

According to media reports, over 500 companies in this eastern Chinese city exported 28 per cent less in the first four months of 2019 compared to the same time last year. However, the scene was different in 2019 when China’s overall textile exports reportedly increased by 8.12 per cent from a year earlier to US $ 119 billion.

According to industry insiders, this was partly because of Chinese textile makers rushing to complete exports to USA before hike in tariffs come into effect. With the initial rush giving way to effects of the trade war getting apparent, China’s textile export growth slowed to 1.5 per cent year-on-year to US $ 48 million in the first five months of 2019.

It may be mentioned here that China is the world’s top textile exporter with 40 per cent of the world’s textiles and clothing exports. The textile and clothing industry is the largest manufacturing industry in China with about 24,000 enterprises. It has the largest production capacity for textile products consisting of cotton, synthetic fibres and silk.

So far, USA has already slapped tariffs on US $ 250 billion worth of Chinese products, and has threatened tariffs on US $ 325 billion more while China, for its part, has set tariffs on US $ 110 billion worth of US goods.

Woven fabric is included in the list of US $ 200 billion worth of Chinese goods now covered by the 25 per cent tariffs imposed by US President Donald Trump.

The effects of this bitter trading developments between the two global economic superpowers are having an adverse impact in terms of employment and price of raw materials needed for textile production, particularly yarn, in China.

The price of FDY150D, a commonly-used super thin fibre, has reportedly dropped from nearly 8,900 Yuan per tonne to 8,050 Yuan per tonne in May, a decline of nearly 10 per cent.

“We have a group of 300 to 400 migrant workers on WeChat. In the past, there were plenty of job postings, but not this year. It is not a good time for the textile business, I guess,” reportedly maintained a migrant worker in search of job, while speaking to the media.

All eyes are now on the G20 conference in Osaka, Japan!

In a rare move, President Trump and China’s Xi Jinping have reportedly agreed to restart trade talks to avert an escalation feared by financial markets, businesses and farmers.

“We’re going to work with China where we left off,” Trump said, while adding that the existing US tariffs would remain in place while negotiations continue but no additional tariffs on other Chinese goods will go forward for the time being.

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