Direction Plan for Textile Industry in China (2009-2011)

Original source:Alibaba.com
Published: 23 Jul 2009 21:15:26 PST

On April 24th, the State Council of China released a detailed support plan to adjust and strengthen the textile and garment industry in the years of 2009 and 2011:

Current Status and Challenges

China's textile industry witnessed a high-speed growth and established a complete industrial supply chain, ranging from upstream fiber material processing to the manufacture of garment, home textiles and industrial textiles.

In 2007, China's textile industry accomplished an industrial added value of RMB 812.6 billion Yuan, accounting for 6.9% of the total industrial added value and 3.3% of China's GDP.

The textile industry exported 30% of the total products into the overseas market, earning an export revenue of USD 175.6 billion in 2007, which is 2.3 folds of that in year 2000. The averaged annual growth reached 18.7%. China shared about 30% of the total textile and garment trade volume in the international market.

Product application areas have diversified to numerous sectors, including the fields of aviation, aerospace, water infrastructure, agriculture, transportation and medical care.

The industry absorbed more than 20 million employees, and 80% of them were rural population. The use of raw materials, e.g. cotton, hemp, silk and natural fiber, also benefits more than 100 million local peasants.

Nonetheless, the industry faces several challenges, such as the underdevelopment of proprietary innovation; high concentration (80%) of textile industry capacity in the coastal regions; high concentration (50%) of export market focusing on the EU, the US and Japan; and high consumption of energy and water. Overcapacity remains an issue in the industry. In the second half of 2008, the global financial crisis brought severe impacts on the textile industry in China.

Directions and Principle

In order to help the Chinese textile industry grow stronger, the Chinese government outlined the following directions: to stabilize the share of China in the international textile market, to expand domestic consumption, to focus on proprietary innovation and technical upgrade, to phase out obsolete facilities, and optimize geographical distribution of the industry.

During 2009-2011, the planned targets mainly focus on five aspects:

A steady increase in industrial production

By 2011, the above-designated sized enterprises are expected to accomplish an industrial added value of RMB1200 billion Yuan, to maintain a 10% annual growth rate; the total export revenue is estimated to reach US$240 billion, with an annual growth of 8%.

Substantial optimization in industrial structure

The overgrowth of fiber processing has been under control. The fiber consumption in terms of three major end products (garment, home textiles and industrial textiles respectively) is adjusted to 49:32:19. The industrial output of the textile industry in west region should be increased to around 20% of the country's total. About 100 well-known enterprises with proprietary brands will be supported to spur the domestic brand export to 20% (of the total exports around China).

Science and technology support more to the textile industry


The industrialization and application of high-tech product have achieved great progress, and the plan targets an increase of the application of internationally advanced technology as well as machinery to 50%; moreover, there is an improvement in the industry's industrial productivity by 10%.

Energy savings and discharge reduction should be considerably improved

During 2009-2011, a reduction of energy consumption per unit of industrial added value by 5% annually, a decrease of water consumption by 7% each year, and a drop of wastewater discharge by 7% per year.

A substantial progress in phasing out obsolete facilities should be done

By 2011, a total capacity of 7,500 million meters of fabric made with high energy/water consuming machinery, outdated printing/printing capacity should be taken out of the market. A production capacity of 2,300,000 tons of chemical fiber should be terminated, as well as low-efficient cotton and wool spinning facilities.

Major Tasks

To stabilize shares in domestic and overseas markets


To stabilize and explore exporting markets
Within the WTO compliance, the government targets an implementation of flexible export taxation policy, active response to deal with trade friction, so as to stabilize China's market share in the international textile market.

New markets should be explored for market diversification.

Capable textile enterprises are encouraged to export and invest overseas including of logistics facilities and distribution centers in key foreign markets. Branding and product innovation efforts are also emphasized.


To promote domestic textile and garment consumption
Enterprises are guided to develop new products that satisfy the needs of different consumer groups in domestic market.

Marketing distribution will also be simplified and improved. Rural market is stressed.

To explore more applications of domestic industrial textiles market
The plan targets to leverage the central government’s policy of expanding infrastructure to support the domestic development of industrial textiles, in the sectors of water infrastructure, transportation, construction, new energy use, agriculture, environment protection and medical care and so on.

To encourage proprietary innovation

To develop the mass production and diversified applications of advanced fibers
The development of advanced fibers and composite materials such as high-performance carbon fibers, aramid fibers, polyphenylene sulfide, advanced polyethylene, basalt fibers, polyamide and new polyester are encouraged.

Other product innovation can center around new fibers generated by farm crop waste and bamboo; textiles made of degradable and renewable fibers; and biological cellulose fibers.


To speed up development and application for industrial textiles
Industrial textiles should be further developed through propriety innovation.

For instance, the plan targets an increase use of domestically made industrial textiles in high-end geo-textiles from the current 20% to 50%, as well as an increase use of domestic industrial textiles made of needle punching, spun-lacing and spun-bonding new technologies from the current 20% to 50%.

Other advanced composite materials for aircraft and other application areas should reach an annual production of 50 million square meters. More progress in medical textiles, such as the surgical gown, insulating clothes and artificial organs, is also encouraged.

To promote proprietary development of textile machinery and equipment
The plan targets an increase of domestic machinery from the current 60% to 70% in market share. To do so, efforts should be made 1) in improving the key parts/components of traditional textile machinery; 2) in developing machinery for the manufacture of industrial textiles; 3) in speeding up the development of high-efficiency, simple and continuous production, and these machines should feature energy-saving and minimal discharge characteristics; 4) in improving the reliability of China-made key fundamental parts and components of textile machinery.

To further establish various systems of standardization
Till 2011, the textile industry will make effort to formulate industrial and technical standards for carbon fibers, high-performance fibers, eco-friendly textiles, functional textiles and relevant equipment.

Standards in the application of specialty textiles for, such sectors as aviation, aerospace, water control, agriculture, transportation, construction, new energy, environmental protection and medical care, should be formulated and/or updated. Updates in the standards of product testing for export and inspection systems are also needed.

To speed up technical upgrade

In the sectors of spinning and weaving, further development should focus on developing fine raw materials, advanced monitoring instruments and the manufacture of high-end combed yarns, fine blended yarns, differentiated yarns, and functional chemical fibers. The plan also targets more efforts to be made in the development of high-count worsted wool fabrics, semi-worsted fabrics, real silk and high-added-value jute products, etc.

In the sectors of printing and dyeing, attention should be given to process optimization via the use of electronic information technology and automation etc. This will help ease the severe environmental pollution caused by industrial players that consumes a large amount of energy and water. The plan targets to reduce energy consumption per unit of industrial added value by 10% in this sector and to achieve a used-water recycling rate of 35%. The production of high-end fabrics and functional textiles should increase to 30% from currently 20%.

In the sector of chemical fibers, advanced technology, improved product functionality, higher product varieties are key words. Differentiated chemical fibers should share half of the domestic production from 36% at present.

To eliminate obsolete production capacity
Outdated machinery includes old-fashioned spun yarn machinery and wool spinning machinery for the cotton spinning industry; early versions of flat-screen printing machinery, hot-melt dyeing machinery and hot-air clip stenter for the printing and dyeing industry; as well as outdated acidic viscose spinning machinery and wet-process spandex production in the chemical fiber industry.

To optimize regional distribution
The textile industry in the Chinese coasts should develop themselves focusing on advanced technology, capitalization, R&D capacity, brand building and marketing channels. Meanwhile, the central and west regions of China will make use of their resources advantages.
To improve public services systemStandards, regulations, and relevant efforts, just like the publicly assessable system and platforms should be established for small and medium enterprises to provide services in information, product design and development and social responsibility.

In addition, information systems to manage enterprises’ resources and transactions, e.g. ERP system and e-commerce system, should be encouraged.

To speed up proprietary brand building
The plan targets a growth of Chinese proprietary brands with international prestige by 10%. To do so, about 100 capable enterprises with their own brands and intellectual properties are encouraged to promote technical progress, improve product quality and design.
Eco-textile certification system will be drafted and implemented.

To improve corporate management
Internal corporate management should also be improved to ensure a good practice in corporate governance, quality management and production safety.

Policies and Measures
Textile and garment export tax rebate rate may be further increased.
More cotton and raw silk may be purchased to benefit cotton and cocoon peasants.
Investment in technical upgrade and technical reform is encouraged.

Domestic consumption would be enlarged. Guidelines on speeding up domestic brand building will be drafted.

Merger and acquisition is promoted among the industrial enterprises.
More financial support would be strengthened for domestic textile enterprises.
Social burdens of enterprises may be eased, such as delayed payment of social insurance premium, reduced premium of social insurance, etc.

Support to small and medium textile enterprises may be intensified through the establishment of public services platform.

More guidance may be provided to intensify industry optimization, e.g. in dyeing and printing sectors.

Industrial associations (or chambers of commerce) are suggested to play their roles actively to encourage players to develop themselves in a disciplined manner.

Voice from the professionals:
Mr. Du Yuzhou (president of the China National Textile&Apparel Council): There is one focus in the Plan: innovation. Since last year, domestic Chinese textile suffered several difficulties; however, according to the industrial statistics for the first two months of 2009, 30% of the total textile enterprises in China still realized a sales increase of 23%, with the profit rising by 33%. Furthermore, the profit achieving by those 30% enterprises accounted for 98% of the total profit among the whole textile industry. The key for their success is innovation.

Recently, we would make effort to promote the concept of innovation to the whole textile industry, and help and support the small and medium sized enterprises, which take a proportion of 99.4% of the whole industry, strengthen the public service, and the development and research of advanced technology.

Moreover, in order to achieve the target of “an increase of the application of internationally advanced technology as well as machinery to 50%”, we would speed up technology upgrading, and eliminating obsolete production capacity. In fact, we have already started this task. Recently, large amount of shuttle loom have been phased out, and the application proportion of shuttleless loom has been enlarged significantly.

Besides, our industry still will pay more attention to the product research and development, as well as the promotion of product differentiation.

He Yanli (Vice Director of Department of Industry, National Development and Reform Commission): In order to stabilize the export market share, in the Plan, we listed “Textile and garment export tax rebate rate may be further increased” into the Policy and Measure Item.
During the August and November in 2008, the textile and garment export tax rebate rate had been increased for two times. According to the direction plan, this year, the rate has already been adjusted twice, increasing from 11% in last August to 16% this year.

The increase of export tax rebate represents the support to the exported domestic enterprises, and it is of great importance to maintain the stable export market for domestic enterprises.
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