Is China losing its competitive edge in clothing?

Indications that China may be losing its competitive edge are becoming increasingly common. One report, in EmergingTextiles.com, referred on May 15, 2008, to "China's 'Textile Crisis'" ? noting that "a rising yuan [renminbi] and higher raw material and labour costs are negatively affecting China's competitiveness".

On the face of it, there is little to suggest that the industry is in trouble. In 2007 China stepped up its textile exports to the world by almost 16%1. Clothing exports rose by almost 21%. Admittedly, these increases were less buoyant than in 2006, when growth of 19% in textiles and 29% in clothing was achieved. But the 2007 growth rates are hardly those of an industry in crisis.

Production figures for 2007 tell a similar story, and provide further evidence to suggest that the industry in China is still booming. Output of man-made fibres rose by 15%, yarn production also increased by 15% and fabric output stood 10% higher. In the clothing and footwear sector, the industry's added value climbed by 17%.

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