China's economic performance in the first quarter of 2024 surprised many exceeding expectations with a 5.3 per cent GDP growth. This increase was driven in large part by the robust performance of apparel and textile industry, a sector experiencing unexpected strength in both exports and domestic markets.

Textile and apparel lead the charge

Data is not yet available for the entire textile and apparel sector, but a bright light comes from combined textile and apparel exports reaching a robust $45.09 billion in the first two months of 2024, a significant 14.26 per cent increase compared to the same period in 2023. Both apparel and textiles saw impressive growth. Apparel exports reached $23.38 billion, a 13.1 per cent increase year-over-year, while textile exports hit $21.71 billion, reflecting a 15.5 per cent jump.

Domestic market remains subdued

While the export sector thrives, China's domestic market for apparel and textiles continues to face challenges. Overall retail sales growth fell short of expectations, climbing only 3.1 per cent in the first quarter as per National Bureau of Statistics. This sluggish domestic demand creates a situation where manufacturers are heavily reliant on exports for growth.

Growth triggers

Analysts attribute this unexpected export growth to several factors.

Resilient global demand: Despite global economic uncertainties, demand for Chinese apparel and textiles remains strong in international markets.

Shifting consumer preferences: A growing focus on value and affordability might be driving consumers towards Chinese-made garments.

Government support: The Chinese government's efforts to stimulate domestic consumption through initiatives like tax breaks and infrastructure spending could be contributing to the positive trend within the domestic market.

However, the positive performance in the apparel and textile sector stands in contrast to the broader Chinese economy, which is grappling with a sluggish consumer market and a slumping real estate sector. Analysts believe the government will need to implement additional measures to stimulate domestic spending and stabilize the property market to achieve its ambitious annual growth target of around 5 per cent.

The future path of China's apparel and textile industry hinges on several factors, including global trade dynamics, geopolitical tensions, and the effectiveness of government stimulus policies. Continued strong export performance can fuel further growth, but external factors like trade barriers pose potential risks. The industry's ability to navigate these challenges will be crucial in determining its long-term success.