After restrictions, China battles glut in textile goods

06 Aug '05

2 min read

The US having already imposed import restrictions on certain Chinese apparel and textile products and with the EU mulling over them, China is now burdened with overstocks of textile goods.

The ending of textile quotas, begining this year had induced Chinese producers to race for capturing maximum global share of the world textile and apparel markets, particularly from the US and European Union countries.

Local textile industries as part of prepations, had mobilised and invested huge amounts of money, manpower and other resources to ensure China dominate the global textiles scenario.

Large scale investments in anticipation of huge market share saw the first five month's investment in the industry balooning up 39.7 percent, year on year basis as per the Chinese Ministry of Commerce figures.

Now, it is revealed that in almost 87 percent of 84 textile product categories, a situation of oversupply persists in the domestic market.

Reasons however, is not farfetched, as trade relation between China and the US & the EU soured over massive surge in cheap Chinese imports to those countries, crippling their respective domestic industries.

All this also shows the urgent need for local producers to regroup and rework strategies to avert the near crisis situation.

Turning to figures, the ministry data conveys that despite trade measures by US and the European Union against Chinese textile exports, China's textile exports touched $450.35 billion, up 21 percent year on year, but 2.4 percentage points lower than that in the same period, in 2004.

Further, the apparel price index saw a 2.1 percentage points drop at 97.9 points during the first half of this year, because of the glut in apparel supply in the Chinese market, says Commerce Ministry .

The Ministry views that China's textile industry will face uncertainities in the second half of this year due to continuing trade disputes with the US and the EU.

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