Zhang Li, inspector of SDRC Economic Operations Bureau recently projected, in 2007 the rapid growth of the development of China’s textile industry since joining the WTO will return to a steady growth, the growth rate will drop slightly. She expected that the output value would increase by 20 percent, export growth between 15-20 percent and improvement of major products at 10 percent.

She pointed out the reasons:

First, cotton prices are not optimistic. Under higher pressure, spinning enterprises are forced to increase the added value of their products.

Second, the costs of chemical fiber industry indicate a sharp rising trend.

Finally, the rise in labor costs and the shortage of labor resources have weakened the competitive edges of the industry.

According to the estimation of China Cotton Association, compared with 2000, wages of textile workers increase by 54 percent in 2005, reaching about 10,000 yuan per capita. But it is far lower than the normal level of the entire manufacturing sector, resulting in ‘Labor Shortage’ in some areas.

In addition, in terms of trade environment, the textile industry also faces many new challenges. The diversity and complexity of trade frictions are shown prominently in the EU’s anti-dumping measures and technical barriers.

The situation provides new challenges to the development of China’s textile industry, and possibly reducing both production and price. Secondly, the international industrial transfer has provided a rare developing opportunity to competitors.

Moreover, developed countries take control on retail links in supply chain by using brands, design, research and development, as well as sales and marketing network advantages to acquire the profits from high-end textile industrial chain, and continue marching into new fields.