TPP has caused my country’s textile and apparel export advantages to gradually lose
In October 2015, 12 negotiating parties including the United States, Japan, and Canada finally reached an agreement on the Trans-Pacific Partnership Agreement (TPP). CCID Think Tank Consumer Goods Industry Research Institute recently proposed that in order to deal with the adverse impact of TPP on China’s textile industry, it is recommended to strengthen textile industry assessment and industry early warning, optimize the export trade environment, increase the pace of “going out” and implement relevant preferential policies as soon as possible .
It is understood that TPP member countries are important regions for China’s textile and apparel exports, accounting for nearly 40% of China’s textile and apparel exports. Among the member states, there are the United States and Japan, the two largest export markets for China’s textile and apparel industries, as well as Vietnam and Malaysia, two countries that rely heavily on China’s textile industry but whose export competitiveness in the apparel industry continues to increase. The textile and apparel industry within TPP members Trade liberalization will profoundly affect China’s textile industry.
Textile and apparel export orders are at risk of loss
It is understood that after the agreement takes effect, compared with TPP member countries, the vast majority of China’s textile and apparel products will not enjoy preferential treatment in the markets of TPP member countries. The large tariff gap will cause China’s textile and apparel products to be at a disadvantage in this market. Price disadvantage. Compared with Vietnam, both China and Vietnam are currently the countries with the highest actual tariff rates for exporting textiles and clothing to TPP member countries, and the gap between the tax rates between the two countries is small. In 2014, the weighted tax rates on China’s textile and clothing exports to TPP member states were 8.3% and 10.8% respectively, while Vietnam’s were 8.1% and 10.1% respectively. After the agreement comes into effect, if the rules of origin are met, Vietnam’s textile and clothing export tariffs to TPP members such as the United States and Canada will be reduced to zero. This means that if the same products from the two countries compete in the region, the textile and clothing products produced in Vietnam will be at least 10% cheaper than those in China.
At the same time, China’s core competitiveness in textile and apparel brands, design and other aspects is not strong, and orders are highly sensitive to price changes. Coupled with tariff disadvantages in the markets of TPP member countries, China will face the problem of losing textile and apparel orders. From China’s perspective, TPP member countries are important purchasing countries for my country’s textile and apparel. The overall changes in my country’s export orders are easily affected by changes in order procurement from these countries, especially the United States, Japan and Vietnam, whose orders account for 50% of China’s textile and apparel Foreign orders account for 29% of the total, and the entry into force of the TPP will definitely have a negative impact on our country’s orders. From the perspective of TPP member states, the proportion of textile and clothing imports from the United States and Japan from China is as high as 39.5% and 62.8% respectively. This means that in the US and Japanese markets, if Chinese textile and clothing cannot continue to maintain their current status Market position, such a high proportion of the market share faces the risk of being replaced by other countries, especially Vietnam and Malaysia.
As for the scale of order loss, since China’s textile industry has the advantages of a sound industrial chain and complete supporting industries, it will still be difficult for other countries to shake it in the short term. In addition, the current textile industry scale of the TPP member countries is smaller than that of China. In the short term, China’s textile industry as a whole is less affected by the TPP, and the scale of order loss is correspondingly smaller.
CCID Think Tank believes that in the long run, the textile industry is highly replicable and has low industrial barriers. The international advantage of a country’s textile industry ultimately depends to a large extent on factor costs, raw material advantages and international market status. However, these advantages of my country in the TPP member market are constantly being lost.
International competitiveness may worsen
At present, the production costs of China’s textile industry are constantly rising, the profit margins of enterprises are constantly narrowing, and the textile industry is gradually moving abroad. After the TPP comes into effect, China’s textile industry will accelerate its transfer to TPP members such as Vietnam, Malaysia, and the United States. In order to enjoy the preferential treatment in the markets of TPP member countries and reduce their dependence on imported yarn in the markets of non-TPP member countries, Vietnam and Malaysia urgently need funds and technology to develop their own textile industries, which just caters to the needs of my country’s textile industry to accelerate going global. China’s textile industry is accelerating its transfer to Vietnam and Malaysia to usher in opportunities. In the United States, due to low prices of natural gas and cotton raw materials, coupled with local tax incentives and subsidies, the cost of the U.S. textile industry is lower than that of my country, which will also attract Chinese textile companies to increase overseas investment. Data from the International Federation of Textile Manufacturers shows that the cost of the US spinning industry is about 30% lower than that of my country.
After the TPP takes effect, China’s voice in pricing textile raw materials such as cotton and chemical fibers will be under pressure due to rules of origin and the expansion of TPP member countries’ own raw material demand. On the one hand, China’s chemical fiber pricing power is subject to other countries in both directions. Although China is the world’s largest producer of chemical fibers, PX, an important raw material for the production of chemical fibers, relies heavily on imports from Japan, South Korea and other countries, and has less say. In the domestic chemical fiber industrial structure, the proportion of conventional products and high-tech products is too high. The proportion of technical fibers is too low, coupled with the lack of large enterprises and large groups with international influence, China’s chemical fiber export pricing power is small. After the TPP comes into effect, in order to enjoy zero-tariff treatment, the “starting with yarn” rules of origin will increase the yarn production capacity in the TPP area, and the chemical fiber production capacity at the front end of the yarn will also increase, leading to the substitution of Chinese chemical fibers. increase, the bargaining space for exports will decrease accordingly. On the other hand, China��Cotton demand requires a large amount of imports, especially the dependence on TPP member countries. Cotton imports from TPP member countries account for about 35% of China’s total cotton imports. The expansion of the domestic textile industry of TPP members will drive demand for domestic cotton. Demand is not conducive to China’s cotton import procurement. In particular, China’s two major cotton importing countries, the United States and Vietnam, will have less bargaining power in purchasing cotton from these two countries.
Although the competitiveness of China’s textile industry remains at the forefront of the world, it is an indisputable fact that as labor costs rise rapidly and pollution control and emission reduction costs increase significantly, international competitiveness continues to decline. From 2008 to 2014, the revealed comparative advantage index (RCA) of China’s textile and apparel industries showed a downward trend. The RCA index of the textile industry dropped from 3.0 to 2.7, and the RCA index of the apparel industry dropped from 3.5 to 3.2. After the TPP comes into effect, China’s textile and apparel industry will be at a disadvantage in the market treatment of TPP member countries, which will lower the overall international comparative advantage of China’s textile industry. In addition, countries such as Vietnam and Malaysia are vigorously developing the textile industry and investment is increasing rapidly. The industrial chain and supporting industries will be With gradual improvement, the comparative advantage of my country’s textile industry will continue to decline, and the decline in international competitiveness will intensify.
There is an urgent need to strengthen assessment and industry early warning
In order to deal with the adverse impact of TPP on China’s textile industry, CCID Think Tank recommends strengthening assessment and industry early warning. The first is to conduct a comprehensive and systematic assessment of the full text of the agreement, as well as its impact on subdivided industries such as cotton textiles, printing and dyeing, and finishing, and propose response plans. The second is to strengthen research on the two annexes of Chapter 4 of the Agreement on the “Shortage List” and “Rules of Origin for Specific Products” and continue to optimize the corresponding export environment. The third is to pay close attention to the negotiation trends of TPP member states and strengthen industrial early warning.
Optimize the export trade environment. The first is to promote free trade area negotiations, reduce relevant trade barriers, and provide convenience for China’s textile and apparel exports and raw material imports. The second is to actively participate in the construction of the multilateral trading system and promote the Doha Round negotiations. Promote the construction of the Asia-Pacific Free Trade Area and fully explore the textile and apparel market space in developing countries. The third is to clean up and standardize China’s import and export charges. The fourth is to establish a trade friction response mechanism.
Increase the pace of “going out”. First, give full play to the upstream and downstream advantages of China’s textile industry chain, strengthen the control of high value-added and high-tech links such as printing and dyeing, increase investment in new product design, research and development, and marketing, and closely cooperate with the manufacturing links of neighboring countries to create The manufacturing base layout model of “China + neighboring countries”. The second is to seize the strategic opportunities provided by China’s implementation of the “One Belt, One Road” initiative and establish strategic partners with countries along the route. The third is to make full use of the labor cost advantages of Southeast Asian countries and the zero-tariff advantage of TPP members, accelerate the transfer of China’s textile industry to Vietnam, Malaysia and other countries, and encourage and support enterprises to invest and build local factories in the form of self-built or jointly built industrial parks. .
Implement relevant preferential policies as soon as possible. The first is to accelerate the implementation of the policy of expanding the accelerated depreciation policy of fixed assets to the textile industry. The second is to summarize the experience of the cotton target price pilot, improve the existing subsidy methods, and accelerate the comprehensive implementation of the cotton target price policy. The third is to implement tax incentives and fee clearance policies for small and micro enterprises. The fourth is to accelerate the implementation of the preferential policy of halving corporate income tax. TPP has caused my country’s textile and clothing export advantages to gradually lose
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