In the first half of 2026, China's textile and apparel exports delivered a seemingly flat but deeply differentiated performance. Customs data shows total exports posted a slight month-on-month increase, maintaining overall stability. Yet during the same period, major Southeast Asian textile producers experienced synchronized export contractions, with Bangladesh recording the sharpest decline. This shift is no coincidence — the global sourcing landscape is undergoing profound restructuring, and the completeness and responsiveness of China's supply chain remain the bedrock of its export resilience.
Market Logic Behind Cotton Price Stabilization
In June, after several months of continuous decline, both domestic and international cotton prices finally stabilized. Domestic basis remained firm, with Zhengzhou Cotton futures significantly outperforming ICE cotton, keeping the domestic-international price spread at a historically high level. This price structure means imported cotton holds limited appeal for Chinese mills, supporting demand for domestic cotton, but it also weakens the export price competitiveness of cotton textiles.
From a supply-demand perspective, domestic cotton commercial inventories are gradually being destocked, and new-season planting area expectations are stable, keeping supply-side pressure manageable. On the demand side, downstream weaving mills operate at moderate utilization rates, with raw material procurement driven by immediate needs rather than speculative restocking. The price stabilization is more a reflection of cost support and improved macro sentiment than a strong rebound in demand.
Coexistence of Export Resilience and Order Diversion
In the first half of the year, the month-on-month growth in China's textile and apparel exports was mainly driven by stable shipments to traditional European and American markets, supplemented by demand from Belt and Road countries. However, the synchronized export contraction among Southeast Asian countries, especially the notable decline in Bangladesh, suggests that global textile orders have not expanded significantly; instead, competition for a limited pie has intensified.
From the perspective of industrial relocation, countries like Vietnam and Bangladesh still hold advantages in labor costs and tariff preferences. Yet recent issues such as unstable energy supplies and heavy reliance on imported raw materials have caused some orders to flow back to China. This backflow is not a trend reversal but a phase-specific fluctuation — Chinese mills compete on the basis of full-category production, fast turnaround, and high stability, not merely the lowest price.
For buyers, the current risk lies in the widening domestic-international cotton price spread potentially pushing up export quotes, which could drive more low-value-added orders to Southeast Asia. For Chinese factories, the key to maintaining profitability lies in enhancing product differentiation rather than engaging in price wars.
Macro Environment and Policy Window
In the first half of the year, the main pressures on global textile and apparel trade came from weak final consumption in Europe and the U.S. and ongoing retailer destocking. China Customs data shows that apparel export unit prices were largely flat year-on-year, indicating that enterprises absorbed some of the impacts of exchange rate and raw material fluctuations through cost control.
Notably, China's cotton target price subsidy policy has entered normal operation, anchoring farmers' planting intentions and market expectations. Meanwhile, the increased flexibility of the RMB exchange rate has provided exporters with more hedging tools. This dual buffer from policy and market forces has helped the Chinese textile industry maintain a stable foundation amid external volatility.