Ni Guomiao, lead analyst of CCFGroup, delivered his report of Changes in China's textile and apparel demand in the post-pandemic context.

First, the growth rate of service consumption in the first 7 months is much higher than that of commodity consumption. Essential consumer goods continue to maintain stable and positive growth, although at a slower pace compared to last year. Optional consumer goods, especially textiles and clothing, have turned from negative to positive growth, outpacing other commodity consumption. Consumption of construction-related products, such as building materials, remains in negative growth due to sluggish real estate sales. The consumption of automobiles has seen an increase in growth rate due to various policies and price reductions.

Sales of sunscreen products are booming, driving demand for nylon. Supported by demand, the fundamentals of nylon filament are good. In the first half of the year, textile and clothing exports initially increased but then declined, with significant decreases in major export destinations, particularly in Europe and the United States. Besides, production in the textile industry has recovered, but profits remain low, and there is significant competition within the industry. In the first half of the year, domestic sales performed relatively well, while foreign trade lagged behind, resulting in low profits for enterprises.

Secondly, there are signs of a slowdown in domestic demand recovery in the second half of the year. High youth unemployment rates, decreased income expectations, high household leverage, and insufficient consumer confidence have all led to a lack of internal driving force for sustained fast growth in domestic demand. The retail of textile and clothing for domestic demand is expected to grow by approximately 11% for the whole year. The global economic downturn continues, and the low level of the shipping freight index indicates sluggish global foreign trade. The decline in demand from Europe and the United States, coupled with destocking cycles, has led to a decline in global textile and clothing exports. Order transfers have resulted in a decrease in domestic textile and clothing exports, and it is projected that textile and clothing exports will decline by around 5% for the whole year. Since late August, downstream textile enterprises have seen an increase in orders, and the operating rate of dyeing factories has improved. With weak export performance, relying solely on domestic sales will likely result in a lackluster peak season. However, there may still be localized popular products, which will test the ability of enterprises to react quickly.