In July 2026, China's cotton yarn exports totaled only 23,900 tons, down 12.01% year-on-year, while cotton fabric exports reached 497 million meters, a 5.27% decline from a year earlier. Month-on-month drops were 8.19% and 13.97%, respectively. These figures reflect more than lost orders; they encapsulate the combined pressures of tariff barriers, currency volatility, and shifting global demand.
Background
Customs data reveal a clear downward trajectory: cotton yarn exports fell 10.79% month-on-month in June, and continued to slide in July; cotton fabric exports, after a brief 4.83% monthly gain in June, gave back those gains in July. Mills in Jiangsu, Zhejiang, Guangdong, and Shandong report no improvement in August orders, making it increasingly difficult to achieve year-on-year growth for the full year.
Multiple external factors are suppressing exports. Pakistan maintains an 18% tariff on imported cotton, yarn, and fabric, raising barriers for Chinese products; its own textile and apparel exports are weak, reducing import demand. The prolonged US-Iran conflict, combined with stronger trade barriers from the US and EU, has dampened global consumption of high-value cotton goods, particularly hitting demand for 40S and above yarn and high-density wide-width greige fabric.
Currency appreciation cannot be ignored. By the end of August 2026, the RMB central parity against the USD stood at 6.7811, up 2,520 basis points for the year, with offshore rates briefly touching 6.7179, a three-and-a-half-year high. For low-margin items like cotton yarn and fabric, appreciation directly erodes exporters' already thin profits and undermines price competitiveness.
Industry Impact
The rapid recovery of textile capacity in Southeast Asia is reshaping global cotton yarn trade. US tariffs of 10%-12.5% on imports from India, Vietnam, Indonesia, and Bangladesh have had limited effect; conversely, these countries benefit from tariff relief on US cotton products, and India's free trade agreements with the EU and UK are boosting local mill utilization. This means Southeast Asia is not only reducing its dependence on Chinese yarn but also competing more directly with China in third-country markets.
For domestic cotton textile enterprises, weak exports are forcing product structure upgrades. Low-count, conventional yarn and fabric have shrinking profit margins, while high-count, high-density, and differentiated functional fabrics retain some pricing power. However, high-value product exports face headwinds from sluggish Western demand and trade policy uncertainty. The stalled US-China tariff reduction on $30 billion worth of goods, coupled with threats of an additional 7.5% tariff, clouds market expectations.
From a supply chain perspective, export difficulties are affecting upstream cotton consumption and yarn prices. Some mills may shift toward domestic sales or increase blended product ratios to maintain operating rates, but this requires time. In the near term, industry-wide capacity utilization may remain under pressure.