Overview of situation
Since the beginning of this year, China's economy has been stable on the whole and has continued to show a good trend. Benefiting from the deepening of the steady foreign trade policy, the recovery of external demand and the low base effect of the same period last year, China's foreign trade export growth accelerated in August, maintaining growth in traditional markets such as the United States and the European Union, which played a good supporting role in exports. Textile and garment exports also stabilized in August, with monthly exports of nearly $28 billion, setting a monthly high for the year. Among them, exports to the European Union rose 14 percent year on year, a six-month high, and exports to the United States increased for the second month in a row.
In the next stage, with the weakening of the "base effect", China's textile and garment exports are still facing greater challenges. Challenges such as the sustainability of the recovery in external demand, trade protectionism and geopolitics will persist for a long time. Germany, Europe's economic bellwether, recently revised its growth forecast for this year from 0.3 per cent to 0.2 per cent, meaning the economy could shrink for the second year in a row. The EU has imposed tariffs on Chinese electric vehicles, and China has taken countermeasures, and China-Eu trade relations are facing uncertainties. The situation in the Middle East continues to deteriorate and the scope of conflict continues to expand. It is worth paying attention to what impact it will have on regional security and global shipping. At present, it is common for export enterprises to obtain a single profit, with the US dollar interest rate cut, the appreciation of the renminbi, the already thin profits of export enterprises will continue to be squeezed, at the same time, the appreciation of the renminbi will also affect the competitiveness of export products, bringing pressure on enterprises to receive orders.
In order to promote the sustained recovery of China's economy, recently, the Chinese government has introduced a package of incremental policies, while emphasizing that "policies conducive to the production and operation of enterprises and healthy development will not stop and will not be less"; The Ministry of Justice and the National Development and Reform Commission publicly solicited comments on the "Law of the People's Republic of China on Promoting the Private Economy (Draft for Comment)" to continuously improve the business environment for enterprises. On October 10, leaders of China and 10 ASEAN countries announced the substantive conclusion of negotiations on version 3.0 of the China-Asean Free Trade Area and issued the Joint Statement of China and ASEAN on the substantive conclusion of Negotiations on Upgrading version 3.0 of the China-Asean Free Trade Area. The two sides will upgrade cooperation in supply chain connectivity, standards, technical regulations and conformity assessment procedures, customs procedures and trade facilitation, which will create more space for Chinese enterprises to expand cooperation with ASEAN.
With the landing of the Fed's interest rate cut boots, China responded quickly, and introduced measures to reduce the reserve ratio, cut interest rates, and reduce the stock housing loan interest rates at the end of September to provide liquidity for the market and further support economic growth from the perspective of monetary policy.
Trade data
From January to August 2024, the total import and export value of China's trade in goods was 4,023.72 billion US dollars, an increase of 3.8% year-on-year (the same below), of which exports were 2,317.82 billion US dollars, an increase of 4.8%, imports were 1,1705.9 billion US dollars, an increase of 2.4%, and the cumulative trade surplus was 611.92 billion US dollars.
In August, the total value of China's trade in goods was US $526.27 billion, up by 5.2% year on year, of which exports were US $308.65 billion, up 8.7%, imports were US $217.63 billion, up 0.5%, and the trade surplus was US $91.02 billion.
From January to August, the trade volume of textiles and clothing was 212.03 billion US dollars, up 1.2% year-on-year, of which exports were 1979.99 billion US dollars, up 1.2%, imports were 14.04 billion US dollars, up 0.5%, and the cumulative trade surplus was 183.95 billion US dollars, up 1.3%.
In August, the trade volume of textiles and clothing was 29.77 billion US dollars, down 0.1% year-on-year, of which exports were 27.95 billion US dollars, up 1%, imports were 1.82 billion US dollars, down 14.2%, and the trade surplus was 26.13 billion US dollars, up 2.2%.
Market analysis
From January to August 2024, the textile and apparel trade presents the following characteristics:
1. Exports resumed year-on-year growth in August, and monthly exports hit a new high in the year; Cumulative export growth from January to August was 1.2%.
In August, textile and garment exports were 27.95 billion US dollars, up 1% year-on-year, slightly better than the previous month, but the growth rate is still lower than the national trade in goods. From January to August, textile and garment exports were 1979.99 billion US dollars, up 1.2%, down 0.1 percentage points from January to July.
Second, exports to the United States and the European Union maintained growth, while exports to ASEAN fell for the first time
In August, among the four traditional markets of ASEAN, the United States, the European Union and Japan, China's exports to the United States and the European Union increased by 6% and 14%, respectively, while exports to ASEAN and Japan fell by 2.7% and 6.2%, respectively. Exports to the four traditional markets totaled $14.85 billion, accounting for 53.1 percent of the month's total exports. Affected by the high base of the same period last year and the difficult settlement of exports to Russia and other factors, this month's exports to Russia and Kazakhstan, Kyrgyzstan and other Central Asian countries showed a significant correction.
In terms of cumulative exports from January to August, China's exports to ASEAN, the United States and the European Union maintained year-on-year growth, of which exports to ASEAN increased by 7.5%, exports to the United States increased by 5.4%, and exports to the EU increased by 2.2%. Exports to Japan continued to fall, down 8.4 per cent from a year earlier. In the first eight months of this year, exports to the above four traditional markets totaled US $105.56 billion, accounting for 53.3% of China's total exports. Exports to 152 countries jointly participating in the Belt and Road Initiative reached $105.87 billion, up 0.2% year on year, accounting for 53.5% of the total exports.
(1) Exports to the US reached 5.38 billion US dollars in August, a new high in a single month.
Us retail sales rose 0.1% month-on-month in August, beating expectations of -0.2%. The consumer price index (CPI) rose 0.2% month-on-month and 2.5% year-over-year, the smallest year-on-year increase since March 2021. Overall, inflation in the US economy has been moderate and consumption has picked up. In August, China exported 5.38 billion US dollars of textile and apparel to the United States, up 6% year on year; Month-on-month growth continued for the sixth consecutive month, and exports in a single month reached a new high this year. The main export product to the United States was needle-woven clothing exports of 3.4 billion US dollars, an increase of 3.5%. Among them, the export volume increased by 16.5%, and the export price fell by 11.2%.
From January to August, exports to the US reached 33.21 billion US dollars, up 5.4% year on year. Among them, the main product of needle woven clothing exports was 20.44 billion US dollars, an increase of 3.7%, the export volume increased by 14.7%, and the export price fell by 9.5%.
From the import data of the United States, in July, the United States imported 11.79 billion US dollars of textile and apparel from the world, an increase of 5%. Among them, imports from China increased by 11.1%, imports from Vietnam increased by 4.9%, imports from India increased by 2.9%, imports from Bangladesh decreased by 6%, China, Vietnam, India and Bangladesh accounted for 29.2%, 14.3%, 7.6% and 6.1%, respectively. From the volume price index, the number of imports in the United States increased by 13% this month, the unit price of imports fell by 7%, and the overall decline in the unit price of imports was significantly less than the decline in the unit price of imports from China.
(2) In August, the growth rate of yarn and fabric exports to ASEAN slowed down, and textile and apparel exports fell 2.7%.
The economic situation of ASEAN has shown a steady recovery trend, and the recovery of garment exports from Vietnam, Cambodia and other countries has led to the export of Chinese textiles to ASEAN countries. From January to August, China exported 34.93 billion US dollars of textile and apparel to ASEAN, up 7.5% year on year; Among them, the export of textile and apparel to Vietnam was 12.04 billion US dollars, an increase of 8.1%; Exports to Cambodia reached $3.94 billion, up 33.7% year on year. By product, from January to August, China exported 18.13 billion US dollars of yarn and fabric to ASEAN, an increase of 11.7%; The export of clothing was $9.97 billion, up 0.4% year-on-year. In August, China exported 3.83 billion US dollars of textiles and clothing to ASEAN, down 2.7% year-on-year, including 2.15 billion US dollars of yarn and fabric exports, an increase of 7.4%, the growth rate slowed down 10 percentage points from the previous month, and exports of yarn and fabric to Vietnam and Cambodia increased 7.5% and 28.1% respectively.
(3) Exports to the EU increased by 14% in August, and the cumulative export growth from January to August was 2.2%.
According to preliminary estimates, the annual inflation rate in the euro area is expected to be 2.2% in August 2024, down from 2.6% in July. Inflation in the euro area has fallen, demand for goods has recovered, and China's exports to the EU have resumed growth from a low base last year. In August, China exported 4.11 billion US dollars of textile and apparel to the EU, an increase of 14% year-on-year. From the country, the growth of exports to the EU mainly comes from exports to Germany, Spain, the Netherlands, France and Italy, in August, my exports to the above five countries were 18.2, 13.7, 13.2, 11.4 and 1.01 billion US dollars, an increase of 24%, 11%, 21%, 16% and 9%, respectively. From the product point of view, in August to the EU exports of needle woven clothing 2.53 billion US dollars, an increase of 12%, of which, the number of exports increased by 20.3%, the export price fell by 6.9%, the increase in exports mainly from the rise in exports. From the cumulative data, from January to August, China's textile and apparel exports to the EU were 27.2 billion US dollars, an increase of 2.2%. Among them, the main product of needle woven clothing exports was 16.21 billion US dollars, down 0.6%, of which the export volume increased by 7.6%, and the export unit price decreased by 7.6%.
From the EU import data, in July, the EU imported 11.26 billion US dollars of textile and clothing, an increase of 0.5%. The top three sources of imports were China, Bangladesh and Turkey, with imports of 36.3, 17.3 and 1.37 billion US dollars, accounting for 32%, 15% and 12% respectively. On a year-on-year basis, imports from China and Bangladesh fell by 1% and 4.2%, respectively, while imports from Turkey rose by 9%.
(4) Exports to Japan declined for the 16th consecutive month, with both export quantity and price falling.
Real wages fell 0.6% in August from a year earlier, the first decline in three months, the health ministry said in a preliminary estimate, as wage growth failed to keep pace with rising prices. In August, China exported 1.53 billion US dollars of textile and apparel to Japan, down 6.2% year-on-year, and has declined for 16 consecutive months since May 2023. The export value of the main export product needle woven clothing was 1.03 billion US dollars, down 8.2%, of which the export quantity was down 6.3%, and the export unit price was down 2.1%. Different from the European and American markets, the export volume to Europe and the United States rose and fell in price, and the decline in the amount was mainly caused by the decline in price, while the export volume to Japan fell in volume and price, and the decline in export volume was greater than the decline in the average export price. From January to August, China's cumulative export of textile and apparel to Japan was 10.22 billion US dollars, down 8.4% year-on-year. Among them, the export of needle woven clothing was 6.58 billion US dollars, down 9.2%; The export price of woven garments to Japan fell, the export quantity fell by 4.9%, and the average export price fell by 4.5%.