In the first half of 2018, facing the complicated domestic and international economic environment, China's textile industry still maintained stable operation, and the abnormal fluctuation of cotton prices was effectively controlled. Affected by trade protection and the rise of unilateral hegemonism, many unfavorable factors may arise in the second half of the year and the situation will become more complicated.
I. Basic Operation of Textile Industry in the First Half of the Year
      1. The operation is basically stable, but the growth rate slows down and is significantly lower than that of other industries. In the first half of this year, the textile industry maintained a stable operation under the situation of increasing policy adjustment.
These policies are as follows: firstly, following the reduction of cotton VAT rate from 13% to 11% on July 1, 2017, on May 1, 2018, another point to 10% will be cut to reduce the financial pressure of enterprises and the cost of importing cotton; secondly, for products previously used in 17% VAT, the VAT rate will be reduced by 1 point to 16% from May 1, 2018; at the same time, the standard of small-scale taxpayers will be raised and small-scale payment will be made. The taxpayer standard has been raised from 500-800,000 yuan to 5,000,000 yuan. The implementation of these policies effectively supports the production and operation of textile enterprises.
      According to the data of the National Bureau of Statistics, in the first half of the year, the added value of Enterprises above the scale of the textile industry increased by 1.1% year on year, maintaining a slight growth. However, the growth rate is much lower than that of other industries. In the first half of the year, the added value of Industrial Enterprises above the national scale increased by 6.7%, which is higher than that of textile industry by 5 points. The production of main products in the first half of the year was 16.738 million tons of yarn, an increase of 1.4% over the previous year, 26.72 billion meters of cloth, an increase of 2%, and 24.61 million tons of chemical fibers, an increase of 8.4%. In 2018, the yarn production growth slowed down obviously, mainly due to the decline in the proportion of yarn production capacity in the Yangtze River Economic Zone and the Yellow River Basin. Although the spinning scale in Xinjiang increased sharply, most of them had not yet formed the scale effect.
      2. Economic benefits are not satisfactory, and textile profits have shown negative growth. In the first half of the year, the main revenue of the textile industry in China was 1469.8 billion yuan, an increase of 7.1% over the previous year, which was lower than the national industry by 2.9 percentage points. Among them, textile, clothing and chemical fibers increased by 1.5%, 4.1% and 17.1% respectively. In the first half of the year, the textile industry realized profits of 118.2 billion yuan, an increase of 3.2% compared with the same period last year, of which textiles fell by 1.1%, garments and chemical fibers increased by 4.4% and 19.3%, respectively. The growth rate slowed down considerably and was much lower than that of other industries. According to the data, in the first half of the year, the profit of the national industrial enterprises increased by 17.2%, which is higher than 14 percentage points of the growth rate of the textile industry. The main industries that drive the sharp increase of industrial profits in China are resource industries, such as coal, petroleum, steel and so on.
      3. Driven by domestic demand, the domestic consumer market grew strongly, and the export of textiles and clothing increased or decreased slightly. According to the latest data released by the National Bureau of Statistics, the retail sales of consumer goods in China reached 180.8 billion yuan in the first half of the year, an increase of 9.4% over the previous year. Among them, clothing, shoes, hats and knitted textiles amounted to 665.1 billion yuan, an increase of 9.2%, which maintained a high growth for two years. However, the export market has increased or decreased slightly. According to the statistics of the General Administration of Customs, textile and apparel exports in the first half of the year amounted to 127.524 billion US dollars, an increase of 3.2% over the same period last year, which was much lower than the 13.6% growth rate of other commodity exports in China and the growth rate of domestic consumption. Among them, textile exports amounted to 58.332 billion US dollars, an increase of 10.3%, while apparel exports amounted to 69.192 billion US dollars, a decrease of 2%. In the first half of the year, textile and apparel exports declined by 3.9%, including 373.6 billion yuan in textiles, a slight increase of 2.6%, and 443.5 billion yuan in apparel, a decrease of 8.8%. According to the analysis, there are three main reasons leading to the decline of export based on RMB. First, the appreciation of exchange rate is influenced by the factors. In the first half of the year, the average value of RMB against US dollar is 6.2742, which is 3.4% higher than that of 6.4917 in the same period last year. Second, the rise of unilateral hegemony of trade protectionism, the announcement of the United States to impose tariffs on multinational steel and other products, which affects and disrupts the international market order; and third, from South Asia. Regional garment industry competition.
      4. Capital speculation, soaring cotton prices, more pressure, cotton prices stabilization. Influenced by domestic cotton direct subsidy policy and cotton reserve policy, cotton in China has been running steadily since 2017, and the price level has basically stabilized in the range of 15500-16000 yuan/ton. However, from late May to early June 2018, due to excessive speculation in Xinjiang climate, a large amount of funds flooded into Zhengzhou cotton futures, resulting in a continuous rise in prices, which soared from 15200 yuan/ton to more than 18500 yuan/ton in several trading days, soaring about 3300 yuan/ton, an increase of 21.7%. At the same time, cotton yarn futures, which continue to trade in cold weather, are also very hot. The turnover has increased sharply and the price has risen rapidly, from 23,200 yuan/ton to over 27,400 yuan/ton, up 4,200 yuan/ton, up by more than 18%. Affected by this, spot and reserve cotton prices have followed up one after another, but follow-up is relatively cautious, slow, trading is also very light. After that, the state adopted measures such as increasing import quota of cotton, setting up special textile field for reserve cotton, and strengthening management of cotton at maturity. Cotton began to stabilize. Internationally, influenced by factors such as global cotton production and demand gap and inventory reduction, international cotton prices continue to rise strongly with the characteristics of big rise and small fall, and under the combined effect of its strong rise, domestic exchange rate appreciation, cotton value-added tax reduction and other factors, import cotton fold port prices have been greatly reduced, and the price gap between domestic and foreign prices has been greatly reduced.