At present the main problems facing the fabric exports are: price rising in raw materials, labor costs advance, increased input in pollution control, continued appreciation of the RMB, lowered export tax rebate rate, the EU and the US to re-implement quantitative restrictions on textiles and apparels.

According to the import statistics by the US Customs in January-July 2006, the US reduced the amount of global fabric imports by 4.16 percent. While India’s exports grew by 11.27 percent, Bengalese grew by 89.41 percent, Vietnam increased by 22.68 percent, Singapore by 237 percent, and Honduras increased by 410 percent. The growth of these countries was due to the weakened competitiveness of China’s fabrics.

Meanwhile, the domination of fabric imports of middle-grade material in domestic market has not changed. China imported US $8.7 billion of fabrics in 2005.

In theory, China’s export competitiveness is mainly based upon cheap labor. Cotton growing industry and garment are typical labor-intensive industries, with the most obvious advantages.

Fabric production is generally considered to be capital-and technology-intensive industry. In international competition, Chinese fabric production lacks competitive advantage.

However, in practice, fabric industry is the most dynamic industry in production and export development.

Experts point out textile industry faces very strong competition in exports. China must further reduce government intervention, and let the invisible hand of market level replace the visible hand of the government. The real role of the government is to optimize the environment for competition, which is in the direction of reform.