Recent data from the World Trade Organization and the United Nations paints a complex picture of China's textile and clothing exports in 2023. As per an analysis by University of Delaware academician Sheng Lu, done on recent World Trade Organization and United Nations, while China retained its crown as the world's largest clothing exporter, it navigated a turbulent landscape of geopolitical tensions and a 'de-risking' trend among Western fashion companies.

Year 2023 saw China's clothing exports reach a value of $164 billion, which was 31.6 per cent of the global market. Despite a 9.7 per cent decrease compared to 2022 due to weaker market demand, China's performance outshined other major suppliers like Bangladesh, Vietnam, India, and Indonesia.

Highlights from the study

The study revealed geopolitical tensions and de-risking efforts by Western companies are challenging China's export outlook. Although China's clothing exports performed better than other major suppliers in 2023, it is losing ground in crucial Western markets like the US, EU, UK, and Canada. China's grip is loosening in key Western markets. The 2024 Fashion Industry Benchmarking Study reveals that 43 per cent of leading US fashion companies now source less than 10 per cent of their apparel from China, up from 18 per cent in 2018. This shift is driven by concerns over forced labor in Xinjiang and escalating geopolitical tensions. It also showed, China is diversifying its export markets beyond traditional Western economies. Asian and African countries are becoming increasingly important destinations for Chinese clothing. However, the long-term potential of these markets remains uncertain.

Table: Decline in US fashion companies sourcing heavily from China

Moreover, China's economic slowdown could lead to an increase in low-cost clothing exports. A weaker domestic market might result in more Chinese-made clothing flooding the international market, intensifying price competition and potentially causing trade tensions. This is already evident in the 7.6 per cent decrease in the average unit price of US apparel imports from China between June 2023 and June 2024.

Table: Change in average unit price of US apparel imports

Asian countries are becoming more cautious about sourcing yarns and fabrics from China. Concerns over forced labor and geopolitical risks are prompting a shift towards alternative regional suppliers.

The study also highlighted, China is actively diversifying its exports beyond traditional Western markets. Asian economies, especially RCEP members, and Africa are gaining prominence. However, the long-term growth potential in these markets, with their own aspirations for clothing production and exports, remains uncertain.

The future of China's textile and clothing exports hinges on navigating a complex web of challenges. While the 'de-risking' trend and economic slowdown pose significant hurdles, China's market diversification efforts and competitive pricing offer potential avenues for growth. However, long-term success will depend on addressing concerns about forced labor, geopolitical tensions, and fostering sustainable growth in emerging markets.