China's textile and apparel exports reached $145.96 billion in the first half of 2026, up 1.4% year-on-year, maintaining a historically high level. However, the real story lies in the structural divergence beneath the surface. June exports hit $29.27 billion, surging 7.2% YoY and 14.3% month-on-month, marking a long-awaited inflection point. But focusing solely on the month-end rebound obscures the fact that upstream and downstream sectors are moving in opposite directions.
Upstream Resilience vs. Downstream Pressure
In USD terms, textile exports totaled $73 billion in H1, up 3.5%, while apparel exports stood at $72.96 billion, down 0.7%. Yarn exports rose 6.6%, fabric exports dipped only 0.5%, but apparel and clothing accessories fell 1.6%. The resilience of upstream intermediate goods reflects the irreplaceability of China's complete supply chain. Overseas brands now prefer small-batch, high-frequency purchases of yarn and fabric over large long-term garment orders—a strategy to minimize inventory risk while retaining reliance on Chinese suppliers.
Conversely, the garment OEM segment faces low barriers, fierce competition, and thin margins. International capacity diversion and price wars continue to pressure apparel exports. Even a 21% month-on-month surge in June was driven by restocking demand, not a trend reversal.
US Market Stands Out
Export flow data for the first five months reveals a starkly divided global demand landscape. The US market became the largest incremental source in H1, with export growth accelerating by 15 percentage points year-on-year. This is underpinned by two factors: improved bilateral relations after the summit meeting, and the completion of inventory destocking by overseas brands, triggering a replenishment cycle.
However, traditional markets like the EU, Japan, and South Korea continue to weaken. The EU is mired in energy-driven inflation, dampening consumer apparel spending. ASEAN and East Asian markets face headwinds from regional tensions and rising energy costs. The temporary easing of Middle East tensions and falling shipping costs provided a short-term boost to June exports, but sustainability remains uncertain.
Currency Impact and Profit Squeeze
In RMB terms, cumulative textile and apparel exports reached RMB 1,012.22 billion in H1, down 2.2% YoY. The nearly 4-percentage-point gap between USD and RMB figures highlights the real profit erosion from exchange rate fluctuations.
Textile exports in RMB fell only 0.1%, showing strong resilience, while apparel exports dropped 4.2%, squeezing margins for garment manufacturers. June saw a synchronized recovery in RMB terms, with fabric performing well, but apparel still lagged. This means even if order volumes recover, companies face exchange losses at settlement—a potential tipping point for small OEMs with razor-thin margins.
Outlook: Pressure Remains, but Direction Is Clear
The World Bank warns that the global economy will continue to face triple pressures from rising energy costs, high inflation, and monetary tightening. Weak consumer recovery in Europe and the US, high production costs, and fragmented global trade patterns will intensify capacity competition.
Yet the June rebound confirms one thing: the completeness and delivery efficiency of China's textile supply chain remains a choice global buyers cannot bypass. The era of low-price, volume-driven exports is over. Product innovation, diversified market strategies, and supply chain resilience are the core levers for navigating the cycle.