Since the second quarter of this year, the escalation of Sino-US trade war friction has brought tremendous pressure on textile and apparel exports. In the same period, the US dollar was relatively strong and the RMB accelerated its depreciation. Especially since mid-June, there has been a continuous and rapid depreciation. In renminbi denomination, China's textile and apparel exports totaled 990.2 billion yuan from January to July 2018, down 3.26% year-on-year. Some insiders believe that Sino-US trade friction has warmed up, market risk aversion has increased, stocks, commodities, and foreign exchange markets have plummeted, and bond markets have skyrocketed. As the largest exporter of Chinese textiles and garments, the US-China trade friction will constitute a significant negative for China's textile and apparel exports.

"The United States' China's $200 billion product tax increase list involves textiles and clothing related to people's livelihood. Textile and apparel exports may not be able to escape." Zhongyu Information analyst An Guang said that the tax increase list shows almost all chemical fiber, cotton, silk, leather and so on. The products of textiles and garments are all within the scope of tax increase, while the Chinese textile and garment industry is heavily dependent on exports. The tax increase will dampen the export of the Chinese textile and garment industry to the United States.

Yu Xiaohong, an analyst at Zhongyu Information, said that China is the largest exporter of textiles and garments, and that textile and apparel exports account for about 13% of China's total foreign trade. The top 10 export markets for Chinese textiles and apparel are: the United States (17%), Japan (8%), Hong Kong (6%), Vietnam (5%), the United Kingdom (4%), Germany (3%), and South Korea (3). %), Russia (3%), Philippines (2%), United Arab Emirates (2%). In 2017, China’s exports to the United States accounted for 15.5% of total textile and apparel exports.

"In 2018, the US dollar strengthened and the United States launched trade friction. The currencies of some emerging economies continued to depreciate, including Argentina, Turkey, and India. The exchange rate of Hong Kong dollar against the US dollar was at a low point in the past 35 years, and the renminbi continued to depreciate." An Guang said Trade friction is persistent. It is expected that the renminbi will continue to depreciate. Although it is good for the export-oriented textile and garment industry, the US tax increase on textile and apparel products will lead to the suppression of the export price of China's textile and garment industry, which may completely offset the RMB depreciation. The export of textiles and garments is good.

The textile and garment industry is a labor-intensive industry. In recent years, China's demographic dividend has gradually disappeared, and the textile and garment industry has shifted to Vietnam and other Southeast Asian countries. "After the United States officially increased taxes on Chinese textile and apparel products, the United States is bound to increase imports of textiles and apparel products from Southeast Asian countries dominated by Vietnam to replace imported Chinese textile and apparel products, just as China has increased imports of soybeans from Brazil and other countries. Instead of increasing the price of US soybeans after tax increases, Zhongyu Information believes that this trade war may be the biggest beneficiary of emerging textile and garment exporting countries such as Vietnam,” An Guang said.

“Although the trade friction has escalated, the United States has increased tariffs to increase China’s costs. However, the US textile and apparel industry is less likely to return to high labor costs in the context of severe shrinkage. At this time, China’s losses will be US order transfers.” Yu Xiaohong said that the main importers of US textiles and apparel are China, India, Vietnam, Pakistan, Mexico, Bangladesh, Indonesia, South Korea, Honduras and Canada. Among the relatively large number of trading partners, Vietnam, as the second largest textile and apparel import market in the United States, is most likely to take profits because of its relatively complete industrial support, low production costs and abundant labor.

Yu Xiaohong stressed that Sino-US trade friction will undoubtedly be a big challenge for the textile and apparel industry, but the Sino-US trade friction is not only affected by Chinese companies, but more American companies will face the huge impact of the trade war. Global economic integration is inextricably linked. Subsequent China will adopt a series of measures to safeguard relevant interests, stabilize the RMB exchange rate, and maintain sustainable economic development.