In the first half of this year, affected by factors such as the frequent outbreak of epidemics in China, my country’s exports of clothing (including clothing accessories, the same below) slowed down significantly, with a year-on-year growth of only 2.4% in April. Since May, with the advancement of domestic work resumption and reaching production capacity, the recovery of logistics and freight, and the full deployment and implementation of various stabilizing foreign trade policies, clothing exports have rebounded rapidly, showing strong development resilience.
1 my country’s apparel exports in the first half of the year
Exports rebounded rapidly in the second quarter
According to customs statistics, my country’s total apparel exports in the first half of the year were US$80.26 billion, a year-on-year increase of 12.1%, a record high for the same period in history. Judging from the quarterly export situation, the first quarter started smoothly, with an increase of 7.4% based on last year’s high base. In April, some major exporting provinces and cities were greatly affected by the epidemic. In May and June, exports quickly stabilized and rebounded. In the second quarter, clothing exports increased by 16.1% year-on-year, 8.7 percentage points higher than the first quarter.
Major apparel categories maintain growth but slow down from last year
In the first half of the year, knitted garment exports were US$36.25 billion, a year-on-year increase of 21.9%, a sharp drop of 20 percentage points from last year’s 42% growth rate. The export of woven garments was US$33.85 billion, a year-on-year increase of 18.9%, which was 4.9 percentage points slower than the 23.8% growth rate in the fourth quarter of last year. Exports of clothing accessories were US$7.23 billion, a year-on-year increase of 23.9%.
Exports of outdoor and commuting clothing grew rapidly
As overseas epidemic control is generally relaxed and commuting resumes, the export of outdoor clothing has grown rapidly. In the first half of the year, exports of coats and cold-proof clothing increased by 51.3% year-on-year, and exports of dresses, shirts, sweaters, and sportswear/swimwear increased by 25.8%, 36.2%, 29.6%, and 22.4% respectively. Due to the large export base last year and the reduced purchase demand this year, the growth of home clothing has slowed down significantly. The export growth rate of underwear, pajamas, bras, etc. is around 10%.
Exports of anti-epidemic supplies under clothing fell sharply
In the first half of the year, my country’s exports of anti-epidemic supplies under medical protective clothing, medical gloves and other clothing items were US$2.48 billion, a sharp decline of 70.4% year-on-year. Excluding the factors of epidemic prevention materials, my country’s conventional clothing exports actually increased by 23% in the first half of the year. Protective clothing and medical gloves have dragged down the growth rate of clothing exports by about 11 percentage points.
Export prices keep growing
Affected by factors such as rising raw material prices and changes in export categories, apparel export prices have increased significantly since the third quarter of last year. The average unit price of woven garment exports has soared by more than 40% since the third quarter of last year, but has fallen back this year. The year-on-year increases in the first and second quarters were 31.7% and 18.3% respectively. The average unit price growth of knitted garment exports has been relatively stable, with year-on-year increases of 8.7% and 11.7% in the first and second quarters of this year respectively.
ASEAN surpasses Japan to become China’s third largest apparel export market
In the first half of the year, China’s clothing exports to the main markets the United States, the European Union and ASEAN were US$19.3 billion, US$15.9 billion and US$7.21 billion respectively, a year-on-year increase of 14.6%, 19.6% and 28% respectively. ASEAN surpassed Japan to become China’s third largest clothing export market. Exports to Japan were US$6.45 billion, a year-on-year decrease of 5.2%.
From the perspective of major export regions, exports to Latin America increased significantly by 36.2%, exports to Africa increased by 2.9%, exports to countries along the “Belt and Road” increased by 15.1%, and exports to RCEP member states increased by 9.7%. From the perspective of major single country markets, exports to South Korea and Australia increased by 4.3% and 17.1% respectively; exports to the United Kingdom, Canada, and Russia decreased by 5%, 4.6%, and 33.2% respectively.
Zhejiang’s exports grew rapidly, while Guangdong’s exports declined significantly.
In the first half of the year, Zhejiang’s garment exports reached US$16.41 billion, a year-on-year increase of 29.1%, accounting for more than 20% of the country’s garment export share. Guangdong’s exports fell by 3.6%, a sharp decline compared with last year’s 29.1% growth rate. In June, Guangdong’s exports fell by more than 10% year-on-year. Jiangsu, Shandong, Fujian and Shanghai ranked third to sixth respectively, with year-on-year growth of 13.5%, 18.9%, 7.2% and 6.3% respectively. Exports from central and western regions such as Xinjiang, Jiangxi and Hunan grew rapidly, with year-on-year increases of 86.7%, 48.9% and 80.3% respectively.
China’s share in the United States and Canada has declined significantly, while other markets are relatively stable
In the first five months, China’s apparel import market share in the United States, the European Union, Japan, the United Kingdom, South Korea, Australia, and Canada was 21.8%, 27%, 54.5%, 23.9%, 31.1%, 61.5%, and 30% respectively. Among them, the United States The market share in , the EU and Canada decreased by 6.1, 0.8 and 4.8 percentage points respectively year-on-year, while the market share in Japan, the UK, South Korea and Australia increased by 0.3, 3.8, 1.4 and 0.9 percentage points respectively year-on-year.
2 International market conditions in the first half of the year
International demand is recovering
In the first half of the year, although the world economy encountered multiple pressures such as the Russia-Ukraine crisis and high inflation, international demand still showed a recovery trend as countries generally emerged from the epidemic. In the first five months, among the major international markets, clothing imports from the United States, the European Union, the United Kingdom, and South Korea all achieved double-digit growth, with year-on-year increases of 15.9%, 15.1%, 23.5%, and 18.2% respectively. Australia and CanadaLarge apparel imports achieved steady growth of 5.1% and 7.2% respectively, and imports from major South American markets Chile and Brazil grew strongly by 76.9% and 14.3%. In the first half of the year, although Japan’s clothing imports fell by 6.2% in US dollars, they still increased by 6.9% in Japanese yen.
Overseas supply chains continue to recover
The pace of recovery in major apparel exporting countries such as Vietnam and Bangladesh has accelerated significantly. In the first half of the year, Vietnam’s clothing exports reached US$17.38 billion, a year-on-year increase of 17.8%, of which exports to the United States increased by 20.3%. Turkish clothing exports reached US$9.94 billion, a year-on-year increase of 15.5%. In the first five months, clothing imports from Bangladesh in major global markets reached US$19.06 billion, a year-on-year increase of 33.5%. In the first five months, Vietnam’s market share in the United States increased by 1.9 percentage points year-on-year, and Bangladesh’s market share in the United States, the European Union, and Japan increased by 2.4, 4.6, and 1.2 percentage points respectively year-on-year.
3 Trend Outlook
In the first half of the year, although the rebound of the domestic epidemic had a certain impact on the smooth operation of the supply chain, clothing exports still maintained steady and rapid growth due to the resilience and comprehensive advantages of China’s textile and apparel industry chain. Looking ahead, the World Bank, IMF, WTO, etc. have all lowered their global economic and trade growth forecasts for the year. The risk of stagflation in the world economy has increased significantly. Many major economies continue to raise interest rates, and global economic recovery faces challenges.
The risk of weakening international market demand increases
In June, the consumer price index in the United States and Europe increased by 9.1% and 9.6% respectively year-on-year, continuing to reach new highs. Since May, U.S. clothing store retail sales have declined for two consecutive months, and consumption has clearly peaked. Inventory pressure on U.S. retailers has increased. The apparel inventory-to-retail ratio has increased for eight consecutive months, and the home furnishing inventory-to-retail ratio has exceeded pre-epidemic levels. In April, EU textile, clothing and footwear retail sales increased by 39.4% year-on-year, but were still 18% lower than the same period before the epidemic. In May, Japanese textile and apparel retail sales increased by 11.8% year-on-year, but were still 20.3% lower than the same period before the epidemic. In June, German retail sales fell 8.8% year-on-year, the largest decline since 1994. The international market trend in the second half of the year is not optimistic.
Declining shipping costs and depreciating exchange rates ease pressure on businesses
Since the beginning of this year, international shipping bottlenecks have eased and shipping rates have decreased, but they are still at a high level compared with last year. China’s export container freight comprehensive index (July 22) was 3229.72, down 9% from January this year, but still 16% higher than the same period last year.
Since April this year, the RMB exchange rate has begun to depreciate. Since May, the exchange rate has basically remained between 6.6-6.8. This round of depreciation is relatively large, which will help increase the profit margins of export companies, but if the fluctuations are too large, it will also increase exchange risks.
The uncertainty of the international trade environment has intensified, the impact of Sino-US economic and trade frictions symbolized by the “Xinjiang-related Act” has become more prominent, and export companies are facing an increase in uncontrollable factors.
Recently, the International Monetary Fund lowered its global GDP growth forecast in 2022 to 3.2% from 3.6% estimated in April, and lowered the US GDP growth forecast in 2022 to 2.3% from 3.7% in April; The economic growth forecast is lowered to 1.7% from 2.4% in April; the Eurozone’s growth forecast for 2022 is lowered to 2.6% from 2.8% in April; the Russian economy is forecast to shrink by 6.0% in 2022. The IMF said the risk of an economic recession will be particularly prominent in 2023. It is foreseeable that the foreign trade situation will become more complex and severe in the second half of the year. China’s garment export companies will face multiple pressures and risk challenges from weakening international demand, overseas supply chain competition and economic and trade frictions.
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