China's value-added industrial output for enterprises above designated size grew 4.5% year-on-year in May, accelerating 0.4 percentage points from April and posting a 0.40% month-on-month increase. However, within this seemingly steady recovery, the textile sector's reading appears notably weaker—2.6% growth, trailing both the national average and the manufacturing sector's 4.4%.
This gap is no coincidence. Among 41 industrial categories, equipment manufacturing and high-tech manufacturing led the expansion, with electronic equipment manufacturing surging 17%, while traditional sectors like textiles, chemicals, and building materials grew modestly. The divergence is intensifying. Textiles, as a typical labor-intensive, export-oriented industry, lagging behind the broader industrial recovery reflects multiple pressures: uneven domestic demand recovery, volatile export orders, and sustained cost burdens.
Signals Behind the Data
NBS data clearly shows the textile sector's recovery pace is notably slow. The 2.6% growth rate, while maintaining positive momentum since early 2026, has not achieved a significant jump compared with the same period in 2025. Behind this lies the incomplete release of terminal consumption—domestic apparel retail growth remains sluggish, while export markets face uncertainties from global trade tensions, with some overseas clients shifting orders to lower-cost regions like Southeast Asia.
Meanwhile, raw material price fluctuations and rising labor costs continue to squeeze profit margins. Although prices of major inputs like chemical fibers and cotton yarn haven't surged, they remain elevated, while downstream garment processors have limited pricing power, leading to profit growth trailing far behind output growth. This "increased output without increased profit" scenario is especially acute among small and medium textile enterprises.
Notably, the May data also reflects uneven regional performance. In clusters like Keqiao and Shengze, known for home textiles and fabrics, order patterns diverge sharply: some factories specializing in autumn-winter fabrics have started receiving orders, with capacity utilization recovering above 70%; while those relying on fast export orders face utilization rates below 50%. This structural divergence suggests the industry's recovery is not synchronized but shows clear seasonal and product-specific characteristics.
Policy and Order Expectations
Industry analysts generally expect marginal improvement in the second half, driven by two factors. First, macro policies—including consumption-boosting measures, industrial technical upgrades, and transition finance—are being implemented, with targeted support for light industry and textiles likely to ease capital and cost pressures. Second, the gradual launch of autumn-winter textile orders will directly drive demand for intermediate products like fabrics and yarns, lifting upstream capacity utilization.
However, it's crucial to recognize that this improvement is more "reparative" than "transformative." For the textile sector to close the gap with manufacturing averages, key bottlenecks must be addressed: how to navigate trade barriers and exchange rate fluctuations in export markets, how to shift domestic consumption from "weak recovery" to "strong support," and how to upgrade the entire industry through digitalization and green transformation to enhance value-added.