In the first half of 2026, China's textile and apparel exports posted a seemingly stable report card: total exports of $145.96 billion, up 1.4% year-on-year. But beneath the surface lies a stark divergence between upstream and downstream sectors, and a competitive logic being redefined.
June's rebound, but not a full recovery
According to the latest customs data, June's monthly textile and apparel exports reached $29.27 billion, surging 14.3% month-on-month and up 7.2% year-on-year. This has been interpreted as the start of the autumn-winter stocking season. However, a closer look reveals that textile exports alone accounted for $13.52 billion, up 12.2% year-on-year, while apparel exports reached $15.75 billion, up just 3.2%.
This means the June rebound was driven by upstream intermediate goods such as fabrics and yarns, not by finished garments. For fabric and yarn suppliers, the order recovery is tangible; but for apparel manufacturers, a 3.2% increase is insufficient to reverse the first-half decline—apparel exports fell 0.7% cumulatively in the first six months.
In RMB terms, the currency pressure is more visible: total textile and apparel exports reached 1012.22 billion yuan, down 2.2% year-on-year. Apparel exports alone fell 4.2% to 505.8 billion yuan, further squeezing profit margins for garment factories.
US market as the single growth engine, while EU and Asia cool
Data from the first five months shows the US market as the biggest growth driver. China's textile and apparel exports to the US expanded by 15 percentage points compared to the same period last year. The stabilization of expectations following the US-China summit and the completion of inventory destocking by overseas brands boosted procurement from China.
In contrast, traditional markets like the EU, Japan, and South Korea remained weak. The EU is grappling with high energy costs and inflation, dampening consumer spending on apparel. ASEAN, Japan, and South Korea also reduced imports from China due to regional tensions and rising energy prices. For companies reliant on European orders, the outlook for the second half remains uncertain.
A temporary easing of tensions in the Middle East and falling shipping costs provided short-term relief for June exports. But the sustainability of these external factors is questionable, and companies should not base long-term growth strategies on them.
Upstream strength from supply chain, apparel faces structural challenges
Detailed data from the first five months reveals the logic behind the divergence: yarn exports grew 6.6% year-on-year, fabric exports slipped just 0.5%, and textile products rose 2.6%; while apparel and accessories exports fell 1.6%.
This reflects a shift in overseas brands' procurement strategies. Brands now favor low-inventory models, reducing large long-term apparel orders and instead placing frequent, smaller orders for yarns and fabrics to quickly respond to market changes. China's complete textile supply chain—from chemical fiber, spinning, dyeing, to finished products—makes upstream categories irreplaceable in terms of delivery efficiency and product quality.
Conversely, the apparel manufacturing segment has lower entry barriers and faces intense competition from capacity relocation to Southeast Asia and South Asia. This pressure is unlikely to ease in the near term.
Second-half risks: triple pressure and transformation direction
The World Bank has warned that the global economy will continue to face triple pressures from rising energy costs, persistent inflation, and monetary tightening. For textile and apparel exporters, this means:
- Weak recovery in consumer demand in Europe and the US limits growth potential for high-end apparel orders
- Rising production costs continue to squeeze profit margins
- Fragmentation of global trade patterns intensifies capacity competition
The first half of 2026 has sent a clear signal: the era of crude, low-price export growth is over. A complete supply chain, product innovation, and diversified global presence are the core capabilities needed to navigate the cycle.