Labor Costs - Textile Material Prices - Energy and Financial Costs

China Textile & Clothing Production Costs Country Report

Producer prices and material costs are now clearly rising in the textile industry in China, as a clear sign that excess capacities have been scrapped. The restructuring process of China's economy is ending with deflation threats clearly fading. This statistical report offers a comprehensive view of production costs and consumer prices in China, including in textile and clothing sectors. Labor costs in major provinces are also being followed.

China's restructuring process is not far from being completed.

Reflecting the end of the deflation threat, producer prices have more significantly risen in November, gaining 3.3% from a year earlier, vs a growth of 1.2% in October.

The rebound of prices at factory gates is a clear sign that excess supplies which had depressed the economy have been scrapped.

Lower capacities

Capacities have been reduced, allowing companies to raise their prices and possibly return to more profitable margins.

In the textile industry, producer prices have risen for the second consecutive month in November, after falling for two years and a half.

The textile raw material prices are also back to positive territory, meaning the textile production prices could continue increasing in 2017.

A rebound of textile production costs will inevitably result in higher export prices and boost relocation of textile capacities to other Asian countries and primarily Vietnam.

Retail prices under control

Consumer prices are more clearly rising, but this is due to a jump in food prices.

Clothing prices at retail are still very slowly increasing, for instance.

Optimism is back amid companies, with the purchasing managers index further climbing in December at 51.7.

The PMI index for new orders has even jumped to 53.2, a level not seen since July 2014.

Exports and imports have remained depressed in October, with shipments of apparel dropping 11.9% in dollar terms from a year earlier.

A falling currency

This is partly due to lower unit prices allowed by a fall of the renminbi. The export performance is much stronger in volume terms.

The yuan has continued sliding after the election of Donald Trump and the consecutive rebound of the US dollar.

This should help supporting exports and will also mean higher import prices and therefore higher inflation.

China is slowly but surely shifting from investment to consumption, which will change the picture of the global economy.


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