Domestic and foreign cotton spreads continue to increase the competitiveness of textile exports

Core Tip: Since the fourth quarter of last year, domestic and foreign cotton spreads have continued to widen and are currently as high as around 5,400 yuan per ton, resulting in a decline in the competitiveness of China's textile and apparel industry, and the decline in corporate profits. "Production, domestic sales, exports, investment, and economic benefits All show deceleration since the fourth quarter of last year, domestic and foreign cotton spreads continue to widen, is currently as high as about 5,400 yuan per ton, resulting in a decline in China's textile and garment export competitiveness, corporate profits decline "production, domestic sales, exports, investment, economic benefits Both show a deceleration or declining trend. The current textile economic situation is more severe. In the press conference on the industrial economy held by the China Textile Industry Federation on May 31st, the reporter noted that with the intensification of the macro-environmental complexity and the fact that the overall operation of the textile industry has slowed in the first four months, people in the industry are The judging of the textile economic operation situation is less optimistic than the “low before and high ones” at the beginning of the year, and replaced with more conclusive risk signals and more urgent policy calls.Director of China Textile Economy Research Center, China Textile Industry Federation News Spokesperson Sun Huaibin explained the data and emphasized the serious situation faced by the textile industry this year.

The severe situation in the textile economic operation pointed out that in the first four months of this year, China's textile industry showed a trend of slowing down. The concrete manifestations were: slower growth in production and investment; narrower growth in textile and apparel export prices and negative growth in exports; growth in industry profits. Falling down obviously. In the first half of 2012, the industry continued to face high external risks. Further improvement of risk control and response capabilities is still the top priority.

According to Sun Huaibin, from January to April, China exported a total of US$71.03 billion worth of textiles and clothing, which was a year-on-year increase of 1.07%. This was a “sudden drop” compared to the year-on-year increase of 19.8% in 2011. "From January to April, the number of China's textile and apparel exports decreased by 2.23% year-on-year, which is a very dangerous figure, indicating that our foreign markets are being lost." Sun Huaibin said. At the same time, the slowdown in domestic economic growth has also slowed down the demand for textiles and apparel. From January to April, the actual growth of clothing retail sales in China was 11.6%, after deducting price factors.

Another serious signal comes from the decline in the economic efficiency of the industry. From January to March, total accumulated profit of textile enterprises above designated size was 53.704 billion yuan, a year-on-year decrease of 1.77%, and the growth rate was 55.34 percentage points lower than the same period of the previous year; sales margin was 4.5%, a decrease of 0.66 percentage points from the same period of last year; The above-mentioned enterprises suffered a loss of 19.67%, and the loss amounted to a 120% increase year-on-year.

The gap in cotton prices has seriously weakened the competitiveness of the industry. The industrial situation is unfavorable. The severe export situation is one of the important reasons. From January to March, the total imports of textiles and garments from the US, Europe and Japan fell by 6.55% year-on-year from the previous year. The growth in international demand showed a long-term lack of strength. The general orders of enterprises were insufficient and the price of products was difficult to increase. The demand from developed countries has decreased, and textiles from China’s emerging economies, such as Southeast Asia, have also declined. From January to April, the year-on-year increase in exports of ASEAN’s textiles has dropped by 59.66 percentage points.

Sun Huaibin believes that, behind the grim appearance, in addition to factors such as insufficient market demand and increased international competitive pressure, the widening price gap between domestic and foreign cotton has become an important factor in the serious export situation.

"The spread of cotton prices at home and abroad has continued to weaken the international competitiveness of China's textile industry." He pointed out that since September 2011, the price of cotton in the international market has oscillated and dropped by around 1,000 yuan compared with domestic cotton prices; at the beginning of 2012, both at home and abroad. The spread of cotton is about 3,000 yuan; as of May 25, the domestic price of 328 cotton is 18,853 yuan/ton, the international market cotton price is 83.3 cents/lb, and after levying 1% tariff and value-added tax, the price is 13,393 yuan/ Tons, the cotton price in the international market was lower than the domestic market price by 5,460 yuan/ton, and the spread widened. Compared with India, another major cotton producing country, China's cotton price is higher than India's cotton price by 7,000 yuan/ton to 8,000 yuan/ton; while Pakistan's cotton yarn price is even lower than China's cotton price. The severely inverted cotton price directly led to domestic cotton spinning companies to bear excessive raw material costs. The serious loss of market orders led to the overall negative growth of China's cotton textile products and clothing exports.

Statistics show that from January to March, the profit of China's cotton spinning industry fell by 3.6% year-on-year, which is tantamount to aggravating the fact that cotton spinning companies, whose original profits were not high. At the same time, the profit of the chemical fiber industry, which was closely affected by cotton prices, also dropped by 46.6% year-on-year. It can be seen that the cotton price issue has also become the main reason affecting the overall profitability of the textile industry.

The industry calls on the country's powerful policies to solve the difficulties Faced with the current grim reality, Sun Huaibin said that the textile industry hopes to distribute imported cotton quotas, and it will be inclined to the production-oriented enterprises in the issuance of discounted prices, release the reserve price, stabilize domestic cotton prices, and reduce the domestic and foreign cotton price spreads. To ensure the smooth operation of the textile industry. “According to the calculation of historical data and the reflection of enterprises, the difference between cotton prices at home and abroad is controlled within 1,500 yuan per ton, and economic indicators of the textile industry are expected to reverse the decline. If the cotton price problem can be resolved as soon as possible, despite the sluggish external demand and domestic demand, the textile industry It will still be able to rely on its own structural adjustment and transformation and upgrading to alleviate the lack of market demand."

"In the long run, we must deepen the reform of the cotton circulation system, improve the macroeconomic control mechanism of cotton, and increase the number of cotton imports year by year, until the dual management restrictions on cotton import quotas and sliding tariffs are removed, and the marketization of cotton prices at home and abroad will be brought into play, and market mechanisms will be brought into play. The regulation effect." Sun Huaibin said.

Sun Huaibin also suggested that relevant departments should effectively solve the “high-learning and low-deduction” that has plagued the development of cotton, silk, and linen industries for a long time, and include the textile industry in the “Administrative Measures of the State Administration of Taxation on Trial Exemption of Input Value Tax for Agricultural Products on Certain Industries”. Pilot scope; timely increase the export tax rebate rate of the textile industry to curb the grim situation in China's textile and apparel exports decline. At the same time, industries and enterprises should continue to accelerate the transformation and upgrading, and strive to turn risks into opportunities.