Forecast of Development Trends in China’s Apparel Industry

The external development environment remains complex and volatile, with intertwined sources of instability and uncertainty; however, the underlying fundamentals—namely, the recovery of international market demand and the positive momentum of China’s domestic economic rebound—will not change. Against this backdrop, the key factors influencing the performance of China’s apparel industry are as follows:

1. The momentum driving growth in international market demand is weakening.

Since the third quarter, emerging variants have posed a threat to economic prospects, leading to an overall slowdown in the global recovery. Inflationary pressures have prompted advanced economies to accelerate monetary policy tightening, which has imposed headwinds on the restoration of consumer spending power and confidence. As a result, growth in international demand for apparel has begun to decelerate, and the foundation for a sustained improvement in external demand remains fragile.

2. The pandemic has accelerated the realignment of global supply chains.

As the COVID‑19 situation in Southeast Asian countries comes under control, production capacity in Vietnam, Cambodia, and other nations is gradually recovering. However, the recent trend of overseas orders returning to China is unsustainable, and the global apparel industry’s value chain and supply‑chain structure will accelerate its restructuring as industries resume operations. According to import data from key markets—namely the United States, the European Union, and Japan—China’s market share has edged up in the U.S. and Japan, while it has declined slightly in the EU. Meanwhile, Bangladesh, India, Turkey, and Malaysia have all seen their shares in these major markets continue to grow.

3. Domestic consumption recovery lacks sufficient endogenous momentum.

Affected by recurring domestic COVID-19 outbreaks, extreme weather conditions, and other factors, the recovery of the domestic consumer market has been somewhat hampered, with both sales and investment growth slowing down and the overall trend showing a weak rebound. According to data from the National Bureau of Statistics, in December, the year-on-year growth rate of China’s retail sales of consumer goods was only 1.7%. For the period January–December, retail sales of consumer goods increased by 12.5% year on year, with an average two-year growth rate of 3.9%, which is 4.1 percentage points lower than the corresponding figure for 2019.

During the same period, fixed‑asset investment (excluding rural households) rose 4.9% year on year, with an average two‑year growth rate of 3.9%, 1.5 percentage points lower than the pace recorded in the corresponding period of 2019. In December, the new‑orders sub‑index within the manufacturing Purchasing Managers’ Index (PMI) remained in contractionary territory for the fifth consecutive month, reflecting generally weak market demand. In the fourth quarter, per capita disposable income and per capita consumption expenditure increased by 8.1% and 12.6% year on year, respectively—growth rates that slowed by 3.9 and 4.8 percentage points compared with the first half of the year. Notably, per capita spending on clothing in the fourth quarter totaled 1,419 yuan, up 14.6% year on year, though the pace of growth decelerated by 6.8 percentage points from the first half.

4. Business operating pressures continue to mount.

Against the backdrop of a global pandemic, a complex and challenging international environment, disruptions to industrial and supply chains, and rising commodity prices, Chinese apparel companies continue to face mounting operational pressures, particularly as manufacturing and export costs have surged for small and medium-sized enterprises. On one hand, tight energy supplies and soaring raw-material prices are driving up intermediate‑goods prices; the gap between the purchasing price index for textile raw materials and the producer price index for apparel has widened steadily, with the December spread reaching 9.2 percentage points, severely squeezing corporate profit margins. On the other hand, port congestion and inefficient logistics networks—exacerbated by the pandemic—have caused international freight rates to soar, while the simultaneous strengthening of the renminbi exchange rate and the U.S. dollar index has exposed apparel exporters to currency‑exchange losses, logistical bottlenecks, and extended payment cycles, posing significant risks to their normal production and operations. According to data from the National Bureau of Statistics, the PMI for small manufacturing firms stood at 46.5% in December, down two percentage points from the previous month, marking the eighth consecutive month below the expansion threshold.