China is still by far the world’s biggest textiles exporter but buyers are turning increasingly to India, Pakistan and even back to Europe, as price gaps narrow. Textile exporters in China are being crushed by rising costs. China’s vast economic transformation has meant rising living standards, but also rising wages, forcing companies to move up the value chain to remain competitive. High-tech industries are springing up to replace labor-intensive sectors such as textiles and apparel.

China’s textile exports fell last year for the first time in six years, slipping five per cent. In January to August of this year, textile and clothing exports are down more than 4.5 per cent. Among the biggest headaches for textiles and other low-end manufacturers are wages.

Average wages in China have grown at an annual compound rate of more than 12 per cent a year in 2013 from 1994. Authorities in China have called for a slowdown in wage rises in order for the country to remain competitive. Chinese manufacturer’s feels in five to 10 years, all low-end production in China will shift to Pakistan.