In the first four months of 2026, China's textile industry saw total profits surge 18.5% year-on-year, sharply contrasting with the 4.8% growth in industrial value-added. This signals a clear shift from scale expansion to efficiency-driven growth, though export contraction is becoming a new stress test.
Structural Changes Behind Profit Recovery
National Bureau of Statistics data shows operating income of above-scale textile enterprises grew 3.1% year-on-year from January to April, while profit growth outpaced revenue growth by over 15 percentage points. This reflects product structure upgrades combined with cost control. Chemical fiber output rose 7.6%, significantly outpacing cotton yarn's 0.9% increase, indicating synthetic fibers continue to substitute natural fibers in downstream applications.
Regional feedback from clusters like Keqiao and Shengze shows grey fabric inventory turnover days shortened by 3-5 days compared to last year. However, order differentiation among small and medium weaving mills is evident: companies focusing on differentiated fabrics maintain utilization rates above 85%, while those producing commodity items face intensified price competition.
Fixed asset investment growth slowed to 6.2%, signaling cautious capacity expansion. Instead of blind capacity increases, companies are channeling funds into smart manufacturing upgrades and environmental equipment renewal. The substantial profit growth provides the financial basis for such technological upgrades.
Export Pressure and Domestic Support
Textile and apparel exports fell 2.3% year-on-year, the most prominent risk factor. According to customs data, apparel exports to the EU and US dropped 4.1% and 3.8% respectively, while yarn and fabric exports to ASEAN maintained 5.2% growth, reflecting ongoing regional supply chain reconfiguration.
On the domestic front, retail sales of apparel, footwear, hats, and knitwear by units above designated size grew 5.1%. Although growth rate moderated from last year, absolute values reached a record high for the period. Home textiles performed notably well, with retail sales up 8.3%, directly linked to recovering real estate completions driving soft furnishing demand.
Notably, monthly export data for March and April showed sequential improvement, but remained negative year-on-year. This indicates the overseas destocking cycle is not over, with restocking intentions still suppressed by weak end-consumer demand. For textile foreign trade companies, price competition is no longer viable; delivery reliability and small-batch quick-response capabilities are becoming new order thresholds.
Cost Pass-through and Profit Redistribution
Volatility in upstream raw material prices has exacerbated profit redistribution along the chain. From January to April, polyester staple fiber average prices rose 5.2% year-on-year, while cotton prices fell 2.1% due to Xinjiang production expectations. This divergence has squeezed margins for chemical fiber companies while providing temporary cost benefits for cotton spinners.
Industry-wide margin improvement also benefits from a rising share of high value-added products. According to data from the China National Textile and Apparel Council's Industrial Economy Research Institute, gross margins for functional and green fiber products are 8-12 percentage points higher than conventional products. However, such products typically involve smaller order volumes and demand higher R&D and quality control capabilities.
For downstream dyeing and finishing, dyestuff and chemical prices rose 3.5% year-on-year. Combined with capacity fluctuations due to environmental restrictions, some small and medium dyeing mills have raised processing fees by 5-8%. This means fabric procurement costs remain on an upward trajectory, pressuring brand sourcing strategies.