"While talking on the sidelines of Intertextile Shanghai to industry leaders, the feeling is, contrary to the general impression of much hue and cry about China growth story slowing down, industry experts and leaders outside China are not pessimistic and are ready to give a leeway to China considering its robust economy and growth."

Recently at the annual National People’s Congress in Beijing China’s Prime Minister Li Keqiang announced a punchy GDP growth target of 6.5-7 per cent for 2016, along with the means he hoped would secure it: a bigger budget deficit than had been planned for last year and faster credit growth.

With sufficient stimulus China will avoid a sharp economic slowdown. But Li did not simply open the macroeconomic spigots. He hinted that the fiscal boost would be designed to help rebalance the economy: China is aiming for just 3 per cent growth in government revenue this year, suggesting that more of the deficit will come from tax cuts to private firms. He made clear that reforms to reduce overcapacity in low-end and inefficient industries were a priority. And by switching from a single-figure growth target to a range, Li gave himself more flexibility in trading off some GDP growth for more reform.

Look closer, though, and there is little sign of any real commitment to reform. Promises to slim industries such as steel and coal sound tough - the government expects nearly 2 million workers will be laid off but the planned reduction would make only a small dent in oversupply. Instead the government seems to be doubling down on its well-worn recipe of debt- and investment-fuelled growth.

Economy still in growth mode

While talking on the sidelines of Intertextile Shanghai to industry leaders, the feeling is, contrary to the general impression of much hue and cry about China growth story slowing down, industry experts and leaders outside China are not pessimistic and are ready to give a leeway to China considering its robust economy and growth. According to Michael Scherpe, President and CEO, MesseFrankfurt, France, “The Chinese market is really not slowing. It’s still going strong, investments keep happening in Vietnam, Bangladesh, Cambodia, and where not. Otherwise also overall global textile economy is not really shrinking. The evolving global economy is possibly polarizing. It is a connected world, the impact of economy is all around.” 

Ercole Botto Poala, President, Milano Unica believes China at the upper end is facing somewhat softening demand. “But overall growth remains sanguine as new bucket of consumers keep coming up as the economy continues to be in the growth mode. Therefore, it’s not really doing that bad. Case in point is Milano Unica grew by 9.8 per cent in China & 8.4 per cent in Hong Kong in 2015 after all. Especially wool segment is showing a lot of promise. And new normal of GDP growth of approximately 7 per cent on incremental base is surely credible.” Percentage interpretation is generally misleading, Poala points out “we don’t sell fabrics in percentages, we sell in meters and China is still growing on such a robust base,” added Poala. Opined Silvio Albini, Cotonificio Albini S.p.A., Ex-President Milano Unica that China’s slowing down impact on upper end is to be seen more so at cotton end. “But increasing perception is that economy is bottoming out. And it may take a few years to bounce back. As for that matter whole world is living in turbulent environment.”

Steady Growth

However, due to the influence of global weak consumption, export competition of China knitting industry intensified dramatically in 2015. The whole industry ran steadily with a growth in spite of the industrial transfer or overseas relocation that was gradually showing up to respond to the trade protectionist arrangements by the developed countries, according to the National Bureau of Statistics. Similarly, China’s economic operation of dyeing and printing industry in the year 2015 ran steadily in general.

However, Kawashima, Senior Director, JFW (Textile Div.) is of the opinion that China is witnessing a slowdown and its here to stay. “Recovery is not going to come in hurry. Surely it’s likely to have far reaching consequences. But it’s really difficult to put a number to the extent slowdown is going to hurt internally or externally.”

Opined Laurent Le Mouel, Nelly Rodi, a design company that Chinese slowdown is not really palpable because generally global trade is shrinking and world is experiencing some bit muted growth. So risk off is new normal, he added.

The international market is difficult to improve greatly as it is affected by the continuous fatigue of global economy in 2016 and the main power in the industrial development in China will rely on domestic market driven by supply-front reform. For China’s textile industry, how to respond to various layouts and competitions allocated by developed countries in ASEAN will be a question that is worthy of attention and thinking. China is active in the creation of free trade agreements and formulation of a variety of supporting policies for cross-border e-commerce, making it possible for foreign trade enterprises in their textile industry to apply its own technological advantages and fully enjoy the system dividend to form the long-tail power through the internet.