In the first four months of 2026, China's textile industry delivered a 'tale of two extremes' performance. According to public data from the National Bureau of Statistics and the China National Textile and Apparel Council's Economic Research Institute, industrial value-added grew 4.8% year-on-year, fixed asset investment surged 7.2%, but profits of above-scale enterprises inched up only 0.9%, while export delivery value slowed to 1.5%. What does this imply? The urge for capacity expansion has not translated into proportional profit growth; domestic demand resilience is offsetting external volatility, but the industry's overall profitability has clearly hit a bottleneck.
Domestic Resilience: Dual Engine of Retail and Investment
On the consumption side, retail sales of apparel, footwear, hats, and knitwear above designated size grew 3.6% year-on-year in Jan-Apr, 1.2 percentage points higher than the same period last year. This growth was largely driven by the May Day holiday consumption boost and seasonal demand release. Notably, online channels performed stronger, with clothing category in physical goods online retail sales rising 8.1%, reflecting an accelerated shift in consumer habits toward e-commerce. For fabric and garment buyers, this means inventory management must align more closely with the short-cycle, multi-batch demands of online retail.
Investment data also sends a positive signal. Fixed asset investment in the textile sector grew 7.2%, with the chemical fiber segment alone surging 12.3%, indicating upstream enterprises' determination in capacity upgrades and new technology deployment. Technology renovation projects in industrial clusters like Shengze (Jiangsu) and Keqiao (Zhejiang) have concentrated, with purchases of automated and digital looms up over 15% year-on-year. However, caution is warranted behind the investment fever: if new capacity cannot be absorbed by the market, it may exacerbate supply-demand imbalance in the coming year, especially raising the risk of price wars in conventional chemical fiber varieties.
Export Pressure: Structural Issues Behind Slowing Growth
Export data is the biggest variable in the first four months. Total textile and apparel exports reached USD 79.86 billion, up 1.5% year-on-year, but the growth rate fell 3.2 percentage points from the same period in 2025. Textile exports grew 2.3%, while apparel exports only increased 0.8%. By region, exports to ASEAN grew 6.7%, still the main growth engine; exports to the EU fell 1.2%, and those to the US edged down 0.5%. This divergence confirms the ongoing impact of global supply chain restructuring—the trend of order migration to Vietnam, Bangladesh, and others has not reversed, and China's share in low-value-added garment processing is being eroded.
More concerning is the profit-side pressure. Operating revenue of above-scale textile enterprises grew 2.9%, but total profits only increased 0.9%, with the profit margin falling from 4.6% in the prior year to 4.3%. On the cost side, raw material prices such as cotton and polyester staple fiber rose 3%-5% year-on-year, while end-product pricing power is limited, especially for export orders where bargaining room is squeezed. For foreign trade enterprises, relying solely on scale expansion is no longer sustainable; product structure upgrades and customer loyalty building are key to breaking through.
Regional and Category Divergence: Who Is Growing Against the Trend?
The data reveals a clear regional divergence. Traditional eastern coastal production areas like Zhejiang, Jiangsu, and Guangdong saw industrial value-added growth generally between 3% and 5%, while central-western regions such as Xinjiang, Anhui, and Henan recorded growth of 8%-10%. Xinjiang, leveraging its cotton resources and electricity cost advantages, saw yarn output surge 14%, making it the nation's largest cotton yarn production base. This shift means eastern enterprises must transition toward high-value-added fabrics and branding, while central-western factories face dual challenges of capacity digestion and logistics cost control.
By category, industrial textiles became the biggest highlight. Industrial value-added in this segment grew 9.2% year-on-year, far above the industry average. Among sub-sectors, filter materials and geotechnical building materials benefited from environmental infrastructure and new energy projects, with full order books. In contrast, output of traditional garment fabrics grew only 1.8%, and inventory cycles for some mid-to-low-end products extended to over 45 days.