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How to view the “magic growth” of textile and apparel exports



The textile and apparel industry experienced “magnificent growth” in February. However, the sharp growth is just an appearance. The most important reason is that the base is low, so that the perform…

The textile and apparel industry experienced “magnificent growth” in February. However, the sharp growth is just an appearance. The most important reason is that the base is low, so that the performance in February is so dazzling, but it is not…
In January, my country’s textile and apparel exports dropped sharply by 10.8% year-on-year. Before people could recover from the plunge in January, they received news that exports surged 99.3% in February. From a decrease of 10.8% to an increase of 99.3%, it is like going from the bottom to the top. Textile people’s hearts are also like riding a roller coaster, which rises and falls with the changes in data. Should we be happy? Has the spring of exports arrived? Will the future trend grow as sharply as in February?
Please stay calm and objective before looking for answers. It may be too early to judge the prospects from this. First of all, whether it is a decrease or an increase, it is compared with the same period last year. Judging from the absolute value of exports in January and February this year, textile and clothing exports in January totaled about 25.54 billion U.S. dollars, while the total exports in February were 21.68 billion US dollars, a decrease of 15% month-on-month.
In addition, industry experts also said that since January and February every year coincide with the Spring Festival, it is normal for the data to change greatly. Usually before the Spring Festival, companies all over the country rush to focus on shipments, making the first month after the holiday relatively bleak. In previous years, the Spring Festival mostly occurred in January, so the data in February was often “ugly”. The low base was an important reason for the “magnificent growth” in February this year. Experts say one or two months of data is not enough to judge industry trends. To study the export situation, please observe it on a quarterly basis for at least three months before making a conclusion.
Despite this, the driving force behind the fluctuations in data cannot be ignored. Why does “divine growth” appear this year? In addition to the low base, there are probably two other important reasons. First, the new export tax rebate policy was implemented on January 1 this year, and the export tax rebate rate for many textiles and clothing was raised from 16% to 17%. In a bad situation, the adjustment of the export tax rebate rate has greatly eased the pressure on enterprises. In order to enjoy export tax rebates, some companies have asked buyers to postpone shipments for orders that are not urgent, because they know that there is often a time lag between the announcement and implementation of new policies. It can be seen from this that my country’s new export tax rebate policy is of great significance to the industry and has greatly mobilized the enthusiasm of enterprises for exporting. At a time when production costs continue to rise, they still have high hopes for this 1 percentage point increase.
The second and most important driving force is the depreciation of the RMB. Exchange rate changes have always played a huge role in import and export trade. Since last year, the RMB has experienced significant depreciation pressure against the US dollar. In the first two months of this year, the depreciation rate of the RMB against the US dollar was nearly 1%. This is undoubtedly a great benefit for export companies. Especially in February, the spot exchange rate of RMB against the US dollar approached the price limit many times. Many interviewed companies said they expect textile and apparel exports to be boosted in the short term.
Changes in the exchange rate are probably one of the most mysterious things. A few days ago, companies believed that the devaluation of the RMB would continue for a period of time. However, with the recent fluctuations in the exchange rate, people are no longer as sure about this expectation as before. Therefore, the overall export trend this year That remains to be seen.
All in all, don’t be too nervous about ups and downs. Do your own thing well and make your own products well. No matter what the external environment is, a good company can settle down and survive.

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Author: clsrich

 
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