China's textile and apparel exports reached $145.96 billion in the first half of 2026, up 1.4% year-on-year in USD terms, but down 2.2% to RMB 1.012 trillion after currency conversion. This contrast highlights the substantive erosion of export profits by exchange rate fluctuations and reveals a structural divergence within the industry. June exports surged 14.3% month-on-month to $29.27 billion, signaling the start of autumn-winter stocking demand, but the recovery intensity varies significantly across product categories.
Category Divergence: Intermediates Show Resilience, Apparel OEM Under Pressure
According to customs data, textile exports reached $73 billion in H1, up 3.5% year-on-year, while apparel exports were $72.96 billion, down 0.7%. The gap widened in June: textile exports grew 12.2% year-on-year, compared to just 3.2% for apparel. Textile intermediates—yarn and fabric—have become the stabilizer of export growth. Yarn exports rose 6.6% in the first five months, while fabric exports edged down only 0.5%.
What does this mean? Overseas brands are shifting procurement focus from finished garments to semi-finished products. Under low-inventory strategies, brands prefer frequent, small-batch purchases of yarn and fabric to maintain supply chain flexibility. China's complete textile supply chain—from chemical fiber, spinning, dyeing to finished products—offers delivery efficiency and quality advantages that are hard to replicate by Southeast Asian alternatives. In contrast, the apparel OEM segment has lower entry barriers and faces more intense international competition and price wars.
Market Restructuring: US Leads, EU and Japan-Korea Weaken
First five-month export data shows the US market became the largest incremental source in H1. China's textile and apparel export growth to the US expanded 15 percentage points compared to the same period last year, driven by stabilized expectations after the China-US summit and inventory destocking by overseas brands. This trend was further reinforced by autumn-winter stocking in June.
In contrast, traditional mature markets like the EU, Japan, and South Korea continue to weaken. The EU is mired in high energy costs and inflation, dampening consumer clothing spending. ASEAN, Japan, and South Korea face dual pressures from regional tensions and rising energy prices, leading to reduced imports from China. This market fragmentation means companies need to reassess each market's growth potential and allocate more resources to the US and emerging markets. The temporary easing of Middle East tensions and falling shipping costs also provided short-term boosts to June exports.
Exchange Rate and Cost Pressures: Double Squeeze on Profits
In RMB terms, textile and apparel exports fell 2.2% year-on-year in H1, contrasting with the 1.4% growth in USD terms. This reflects the impact of RMB appreciation against the USD, directly compressing exporters' profit margins. Textile intermediates showed strong resilience with only a 0.1% decline in RMB terms, but apparel exports fell 4.2%, putting garment manufacturers under greater profit pressure.
For foreign trade enterprises, exchange rate risk management has become essential. Measures such as locking in forward settlements, using RMB for transactions, and optimizing foreign exchange exposure need to be integrated into daily operations. Meanwhile, rising production costs—energy, labor, logistics—continue to erode profits. The World Bank's warning is not unfounded: global inflation, energy price hikes, and tightening overseas monetary policies will persistently impact global consumer growth.
H2 Outlook: Certainty Amid Uncertainty
The June export rebound has injected confidence into the industry, but H2 external uncertainties remain. Weak recovery in European and US end-consumption, along with fragmented global trade patterns and capacity competition, will continue to test industry players. However, the completeness and resilience of China's textile supply chain provide solid support. The era of low-price, high-volume exports is over. Product innovation, diversified global presence, and supply chain efficiency are the core drivers to navigate the cycle.