The growth rate falls

The growth rate of China's textile and garment total exports in this year's first quarter was 18.52 percent year-on-year, followed by 4.87 in the second quarter. However, the merchandise export indexes are calculated using dollar. And the yuan has risen 21 percent against the dollar since China stopped pegging its currency to the dollar in July 2005. Actually, the growth rate of exports of China's textile and garnment was slowdown.  

US market remain in doldrums

United States which stands as the major market for Chinese textile and garment exports, accounting for 15 percent of the country��s overall export market, has become gloomy under the expanding impact of subprime lending crisis. China's textile export to the United States in the first six months dropped by 2.43 percent from the same period of last year to 13.834 billion USD, said sources with the Office of Textiles and Apparel, US Dept. of Commerce.

The crisis in America's subprime mortgage market, which lends to people with patchy credit records, has crimped US economic growth and set off huge turmoil in the global credit markets. More worse, analysts predict that fallout from global financial crisis will be long lasting. All these could mean a weakened demand in the US, hurting the bottom line for Chinese exporters that supply US stores. Can China exporters be lucky enough to be exempt from the negative influence of the subprime crisis?

More pronounced slowdown EU market

GDP declined by 0.2% in the euro area1 (EA15) during the second quarter of 2008, compared with the previous quarter, according to flash estimates published by Eurostat, the Statistical Office of the European Communities. Indications that the EU economy will lose momentum heading into the second half of the year have become stronger. Confidence indicators cooled significantly in recent months due to deepening fears over the negative impact of the US slowdown, the global financial crisis and particularly on concerns about the impact of rising inflation on the EU economy. The economic slowdown in the euro zone would help the growth rate for China's textile exports to the market decrease from 17.929 billion USD in mid 2008 to low level at the end of the year.

Weak Japan's demand

The Japanese economy has also retreated owing to weaker consumer spending and easing export growth. Japan��s real GDP registered a slower growth of 2.4% during the second quarter of 2008, compared with the previous quarter, as the trade exposure to the US takes its toll. Japan is the largest trade partner importing China's textile products over recent years. China's textile export to Japan in the first six months amounted 9.608 billion USD, 6.82% higher than the same period last year. However, a predicated weakened demand in Japan would hurt Chinese exporters in the future.

Southeast Asian ��s undetermined demand

While costs in China are rising nationwide, the U.S. and E.U. textile's manufacturers have established more and more offshore production facilities in lower-cost countries, particularly in Southeast Asian countries. Since these countries have not well-equipped supply chain integration, they have to import textiles from China. (See table1.)

Table1. China��s textile and garment exports to Southeast Asian during the first half of 2008

Although Southeast Asian countries��s demand for China's textiles is high, its forecast is undetermined. Anyway, many analysts predict that fallout from global financial crisis will be long lasting.