The resilience of China's textile and apparel trade in the first half of 2026 runs deeper than headline figures suggest. The General Administration of Customs reported total exports of $145.96 billion, a modest 1.4% year-on-year increase. However, the real signal lies in June's export surge to $29.27 billion, up 14.3% month-on-month, indicating overseas buyers are accelerating restocking for autumn-winter orders after clearing high inventories.
Notably, exports in RMB terms fell 2.2% year-on-year in H1, contrasting with the 1.4% growth in USD terms. This divergence reflects FX volatility squeezing exporters' pricing power and margins. For SME-focused foreign trade firms, hedging FX risk through forward contracts and optimizing settlement currency mix has become a necessity.
Intermediate Products Shine, Apparel OEM Still Struggles
The structural divergence between upstream and downstream segments intensified. Textile exports (yarn, fabric, made-ups) reached $73 billion, up 3.5%, while apparel exports stood at $72.96 billion, down 0.7%. The gap in growth rates—over 4 percentage points—underscores fundamental differences in supply chain competitiveness.
Yarn exports grew 6.6% year-on-year; fabric exports edged down only 0.5%; made-up textile exports rose 2.6%. These intermediates benefit directly from overseas brands' "low inventory, high-frequency replenishment" strategy. Brands order semi-finished goods instead of finished garments, relying on China's integrated supply chain for speed and quality. This makes intermediates far less replaceable than apparel OEM.
Apparel exports face stiffer headwinds: capacity diversion to Southeast Asia and South Asia, price competition, and weak end-demand. While the 0.7% decline narrowed from last year's pace, it doesn't change the structural pressure. For garment factories, cost-cutting alone won't suffice; shifting to high-value categories like functional wear and quick-response orders is the only viable path.
U.S. Market Stands Alone; EU, ASEAN Demand Slows
Geographic divergence is another defining feature. Data for the first five months shows the U.S. market as the largest growth driver, with export growth expanding 15 percentage points from the same period last year. The China-U.S. summit stabilized expectations, and inventory destocking by brands drove increased sourcing from China.
But this bright spot's sustainability is questionable. Post-election policy uncertainty and high inflation eroding consumer spending could dampen orders in H2. Companies cannot rely on a single market.
The EU, Japan, and South Korea collectively weakened. The EU's high energy costs and inflation depress clothing spending; ASEAN's imports from China fell amid regional tensions and energy price hikes. This forces textile firms to accelerate diversification into emerging markets like the Middle East, Latin America, and Africa.
Can June's Rebound Sustain?
June's export rebound was driven by concentrated autumn-winter stocking. Textile exports hit $13.52 billion, up 12.2% year-on-year; apparel exports reached $15.75 billion, up 3.2%. Month-on-month data is even more telling: apparel exports surged 21%, and fabric growth was robust.
Two tests loom. First, a temporary easing of Middle East tensions and lower shipping costs are short-term boons; any geopolitical flare-up will erode margins again. Second, weak end-consumer demand in Europe and the U.S., compounded by the World Bank's warning of energy prices, inflation, and monetary tightening, limits growth potential.
For companies, June's rebound is a confidence booster, not a signal for capacity expansion. The H2 strategy should focus on: securing intermediate order stability through supply chain advantages; in apparel, prioritizing high-value, quick-response orders and avoiding low-end price wars.