Traditional Textile Sector Lags in Recovery: May Value-Added Growth at Only 2.6%, Industry Divergence Signals Caution

The latest industrial production data from the National Bureau of Statistics for May reveals that the textile industry's value-added growth rate was only 2.6% year-on-year, trailing behind the overall industrial growth of 4.5% and the manufacturing sector's 4.4%. This starkly exposes the sector's sluggish recovery amid the post-pandemic rebound—while high-tech industries like equipment manufacturing and electronics lead with double-digit growth, textiles remain squeezed between weak demand and elevated costs.

Industry Divergence Intensifies, Traditional Segments Under Pressure

In May, 28 of 41 industrial categories posted growth, but the distribution was highly uneven. Electronics manufacturing surged 17%, becoming the growth engine, while traditional sectors like textiles, chemicals, and building materials lagged significantly. This structural divergence is not accidental; it reflects the accelerating marginalization of labor-intensive, low-value-added links amid industrial upgrading. The textile sector's 2.6% growth creates a huge 'growth gap' with high-tech manufacturing, serving as both a warning and a catalyst for transformation for small and medium exporters.

Weak Domestic and Foreign Demand Is the Core Drag

The sluggish recovery in textiles stems fundamentally from insufficient demand. Domestically, consumer spending sentiment is slow to recover, with limited growth in retail sales of apparel and footwear, leading to weak orders for upstream fabrics and yarns. Externally, persistent inflation in major economies has lengthened inventory digestion cycles for Western buyers, with new orders dominated by short-term, small-lot deals. Industry data shows that cumulative textile and apparel export growth in the first five months remained low, far from pre-pandemic levels. On the cost side, fluctuating raw material prices for cotton and chemical fibers, combined with rigid labor and energy expenses, further compress corporate profit margins.

Autumn-Winter Orders and Policy Support May Be Turning Points

Despite short-term pressure, opportunities exist. Industry insiders expect that as autumn-winter textile orders gradually kick in—especially demand for thick fabrics like down jackets and coats—capacity utilization may improve. Concurrently, consumption-boosting policies, technical transformation loans, and transition finance tools are accelerating their positive transmission. For textile enterprises, the key to seizing this window lies in enhancing product value through digital upgrades and green certifications, rather than relying solely on low-price volume.

Practical Recommendations

For Buyers - Current cotton and chemical fiber fabric prices are relatively low; consider locking in long-term contracts for routine autumn-winter varieties to hedge against later raw material price hikes. - Focus on mid-size suppliers with green certifications or functional fabric R&D capabilities, as they are more resilient in subsequent policy support and order competition. - Avoid over-concentrating orders in a single production area; diversify across clusters like Keqiao, Shengze, and Nantong to mitigate regional production caps or logistics disruptions.

For Foreign Trade Firms - Accelerate market expansion into Southeast Asia and Belt and Road countries to reduce reliance on traditional European and U.S. markets, diversifying export risks. - Utilize the current exchange rate window to conduct appropriate forward hedging for future receivables, preventing profit erosion from currency fluctuations. - Actively apply for local technical transformation subsidies and transition financial support, prioritizing investment in automated sewing and smart warehousing for quick returns.