The financial turmoil offsets the cancellation of quotas, and textile exports may fall to a low in the first quarter of next year
The financial crisis has offset the positive effects of quota cancellation
With the expiration of the Sino-US quota agreement and the China-EU bilateral monitoring agreement on textiles at the end of this year, China’s textile exports will no longer be bound by quotas from next year. Faced with such benefits, However, Chinese textile and apparel export companies cannot be happy. The signals released by the Canton Fair, which is known as the “wind vane” of foreign trade, show that both buyers and orders are showing a downward trend, and China’s textile and apparel exports may fall into a trough next quarter.
Zhong Haosen, general manager of the Jiali Business Department of Guangdong Textile Import and Export Co., Ltd., told reporters: “Due to the news of the cancellation of textile quotas in 2005, we received more than 70 buyers at the Canton Fair booth in just one morning. This time However, the number of people attending the Canton Fair has dropped sharply to more than 10 people, especially since there was not even a single American buyer this morning. It is expected that exports to the United States will fall sharply next year. The euro has depreciated greatly in recent months, and the EU market is not optimistic either.”
Why is it difficult for China’s textile exports in the upcoming 2019 to experience the “blowout” situation of 2005 without quota control? Zhong Haosen believes that it is mainly due to the drag of the entire economic environment. Demand in Europe and the United States is weakening. From the fourth quarter of this year to the next quarter, China’s textile and apparel industry has experienced at least six months of labor pains. He said that due to the financial crisis, buyers are now particularly cautious when placing orders, generally only placing orders for one month. Moreover, buyers in Europe, Australia and other regions have depreciated by 20% to 30% against the US dollar in recent months. The procurement cost increases when converting U.S. dollars to place an order with China, so the price reduction is very severe. The company will make almost no profit, and exports will definitely see negative growth in the next quarter.
Jiang Jianyi, the relevant person in charge of the International Trade Division of Shanghai Longtou (Group) Co., Ltd., said in an interview with this reporter that there were fewer buyers at this Canton Fair than the previous one, and they mainly inquired about prices, and very few actually placed orders. The recovery of textile and apparel exports will have to wait at least until the second quarter of next year.
In Jiang Jianyi’s view, entering the quota-free era next year may not be good news under the current situation. Buyers may even take the opportunity to demand lower prices because Chinese export companies have less quota costs, causing export price confusion and easy triggering Trade Friction. The company’s profits have dropped by 5% this year due to multiple factors. If the industry continues to compete at price cuts, it will have to take the initiative to give up some unprofitable orders.
This year, due to multiple factors such as exchange rates and rising costs, China’s textile and apparel export growth has declined. Customs data shows that from January to September this year, China’s total exports of textiles and clothing were US$136.94 billion, a year-on-year increase of 8.1%, and the growth rate was 11.9 percentage points lower than the same period last year. Among them, exports to the United States were US$19.24 billion, a year-on-year increase of 1.4%, and the growth rate was 28 percentage points lower than the same period last year; exports to the EU maintained a high growth rate due to the relaxation of quantitative restrictions.
Experts said in an interview with reporters yesterday that China’s textile and apparel exports have maintained a certain growth this year, driven by factors such as the EU’s lifting of restrictions on Chinese textiles and strong demand. However, as the general environment deteriorates, the EU, China’s largest export market, has Market demand in textile and apparel export regions is also showing a weakening trend. Due to multiple factors, China’s textile and apparel exports should see zero or negative growth in the next quarter. It would be a good situation if it can recover in the second quarter.
In addition, the industry is also worried that after the cancellation of quotas next year, it may encounter frequent use of trade remedy measures by Europe and the United States. Obama, the popular candidate for U.S. President, publicly declared that if elected, he would monitor China’s textile and clothing imports after the special safeguard measures are lifted on January 1 next year, and claimed that he would use all diplomatic means to end China’s artificial exchange rate manipulation.
The relevant person in charge of the Foreign Trade Department of the Ministry of Commerce of China recently made a speech on the issue of textile exports in 2019. Under the current situation, in order to implement the spirit of the State Council Executive Meeting and maintain the steady growth of exports of textiles and other labor-intensive products, the Chinese government will further Strengthen dialogue and communication with relevant countries to ensure a smooth transition and create a good external environment for my country’s textile exports. AAKY,7II56U65
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