From January to April 2026, China's textile industry delivered a seemingly stable yet turbulent performance. Industrial value-added grew 3.8% year-on-year, but total industry profit fell 1.5%, signaling a widening gap between capacity expansion and profitability. This divergence means downstream buyers and upstream factories face markedly different market temperatures.
Structural Divergence Behind the Numbers
According to public data from the National Bureau of Statistics, fixed-asset investment in the textile industry grew only 2.1% in the first four months, down 1.3 percentage points from the same period last year. In eastern coastal industrial clusters like Keqiao and Shengze, the share of technological upgrading investment increased, while new capacity projects in central and western regions notably decreased. Meanwhile, industry revenue rose 4.0%, but operating costs surged 5.3%, directly squeezing profit margins.
Chemical fiber output stood out, growing 5.2% year-on-year, well above the industry average. This was mainly driven by expanded applications of polyester filament yarn in apparel fabrics and industrial textiles. However, price volatility for chemical fibers intensified, as raw material costs like PTA fluctuated with international oil prices, pressuring downstream weaving mills.
Dual Pressure from Exports and Domestic Demand
Customs data shows textile and apparel exports fell 0.3% year-on-year, with exports to the EU down 2.1% and to ASEAN up 1.8%. This divergence reflects the ongoing impact of global supply chain restructuring: orders redirected to Southeast Asia partially offset the contraction in Western markets, but overall demand remained weak.
On the domestic front, retail sales of apparel, footwear, hats, and knitwear by units above designated size grew 2.5%, slowing from 2025. Consumer confidence fluctuated in early Q2, extending inventory turnover days for apparel to 68 days, up 4 days from last year. Home textiles performed relatively steadily, with online retail sales up 6.8%, though offline department store channels declined 1.2%.
Industrial Cluster Response and Supply Chain Transmission
Keqiao Light Textile City saw fabric transaction volume rise 1.9% but value only 0.7%, indicating clear downward price pressure. In Shengze, water-jet loom operating rates averaged 78%, below last year's 82%, as small and medium weaving mills proactively reduced output to cope with insufficient orders. Nantong's home textile cluster bucked the trend, adding 15% digital printing capacity, mainly driven by growth in small-batch custom orders.
Upstream chemical fiber producers saw profit margins squeezed by raw material costs, with processing spreads for POY and FDY narrowing to below 400 yuan per ton, forcing some small polymerization units to shut down for maintenance. Downstream garment processors faced dual challenges of rising labor costs and recruitment difficulties, with average monthly wages up 8% year-on-year but worker attendance only reaching 85%.
Industry Outlook and Actionable Recommendations
Looking ahead to the second half of the year, the industry will likely continue its pattern of 'volume growth with thin profits'. Industrial value-added growth may stay in the 3%-4% range, but profit totals could remain under pressure. On the export front, with the US presidential election approaching, trade policy uncertainty is rising, urging companies to diversify markets early.