China Announces Stimulus and Adjustment Program for Textile Industry   

On April 24th, 2009, China's Ministry of Industry and Information Technology (MIIT) announced a stimulus and adjustment program for the textile industry to ensure the improvement of the textile industry during the period from 2009 to 2011.

1. Current situation   

According to MIIT's data, China's textile industry generated RMB812.6 billion of industrial value added in 2007, accounting for 6.9% of the country's total and 3.3% of GDP. Around 30% of the textile products were sold in the international market. In 2007, China's textile and garment exports amounted to US$175.6 billion, 2.3 times that of 2000, with an average annual growth of 18.7%, and accounting for 14.4% of China's total exports and 30% of the world's textile and garment trade. The domestic textile industry employs over 20 million workers, and consumes nearly 10 million tons of cotton, wool, hemp, silk and other natural fibers per year, helping about 100 million farmers. But MIIT thinks China's textile industry still has some major problems. First of all, its capability for independent technical innovation is very weak. Its development pace of high-tech functional fibers and composite materials is slow, and its high-performance textile machinery and equipment are mainly imported from foreign countries. Second, its industrial layout is not rational. 80% of its textile production capacity is concentrated in the coastal areas, and nearly 50% of its exports are shipped to the European Union, the United States and Japan - far from a diversified layout. Third, this industry has lot of work to do in energy conservation and pollution reduction. The energy consumption, water consumption and wastewater discharge of the textile industry account for 4.3%, 8.5% and 10% of country's industrial total, respectively. Finally, imprudent expansion of production capacity has led to excessive capacity in some sub segments.
    Since the second half of 2008, the international financial crisis has had severe impacts on China's textile industry, leading to an imbalance between supply and demand, business difficulties, increasing losses and declining employment. China's textile industry has plunged into a serious plight.

2. The basic principle and objective of the stimulus and adjustment program for the textile industry  

The objective of this program is to protect China's share of the international textile market, expand the domestic demand, promote structural adjustment and industrial upgrades by stimulating independent technological innovation and renovations, eliminating outdated capacity and optimizing the industrial chain and distribution, consolidate and strengthen its capability to hire more migrant workers, and prompt a conversion from being large to being strong.
    Program goals for China's textile industry in 2009 - 2011:
    1)  Maintain the steady growth of total output. By 2011, the textile enterprises above a designated size (all state-owned textile enterprises and other textile enterprises with an annual production value of more than RMB5 million) will achieve RMB1.2 trillion of industrial added value in total, with an average annual growth rate of 10%, and their total exports will amount to US$240 billion, with an average annual increase of 8%.
    2)  Optimize industrial structure. The overheating growth of fiber processing will be significantly controlled. The proportion of fiber consumed by clothing, household products and industrial products will be adjusted to 49:32:19. Midwestern China's share of the textile industrial output value will increase to about 20% of the total. About 100 influential and famed textile enterprises with their own brands will be fostered. The ratio of exports of independent brand textile products will rise to 20% of the total.
    3)  Scientific and technological support in the industry will be markedly improved.
    4)  Efforts to conserve energy and reduce pollution will achieve significant results. In the textile industry, the energy consumption, water consumption and wastewater discharge per unit of industrial added value will annually drop by 5%, 7% and 7%, respectively on average.
    5)  Elimination of outdated capacity will make substantial progress. By 2011, 7.5 billion meters per year of dyeing/printing capacity with high energy consumption, high water consumption and low technology level, and 2.3 million t/a of outdated chemical fiber production capacity will be eliminated. Elimination of outdated production capacity of cotton spinning and wool spinning will be accelerated.
    This stimulus and adjustment program will emphasize China's textile enterprises to improve their capability of independent technical innovation:
    1)  Promote the industrialization and application of high-tech fibers. Accelerate the industrialization of advanced, high-tech fibers and composite materials, such as high-performance carbon fiber, aramids, polyphenylene sulfides, ultrahigh-molecular-weight polyethylene, basalt fibers, polyimides and new-type polyesters, and raise their total output from the current 70 000 t/a to 140 000 t/a. Make full use of agricultural products, crop wastes and other biomass resources such as bamboos and fast-growing forests, and realize the industrialization of biodegradable, renewable biomass fibers and their comprehensive utilization. The production of cellulose fiber by solvent extraction will be industrialized at the level of over 10 000 t/a, and the production of polyols by biotechnology will reach 1 000 t/a level industrialization. The proportion of cellulose fiber produced from biomass will be raised from currently 6.3% to 8%.
    2)  Speed up the development and application of industrial textiles. Support the development and application of light-weight and special decorative textile materials, such as multi-functional roofing materials and membrane structural materials. Support the development and application of high-performance reinforced composite materials used in wind turbine blades, aircrafts and spacecrafts, and their annual output will reach 50 million square meters. Encourage the development of agricultural textile materials for water-saving irrigation, water storage and controlled-release packaging.
    3)  Independently make more textile equipment. Increase the domestic market share of China-made textile machinery from 60% to 70%.
    The government will take measures to support textile enterprises in renovating technology. Encourage textile dyeing/printing enterprises to adopt high-performance, short-process and water-free or water-saving dyeing/printing technologies and equipment and raise the automation level of their production. Require textile enterprises to reduce their energy consumption per unit of added value by over 10% and raise their water reuse rate to over 35%. MIIT will take measures to raise the proportion of high-end products, such as new-type fiber fabric and functional finishing products, from the current 20% to 30%.
    In the chemical fiber segment, the Chinese government will encourage textile enterprises to use applicable advanced technologies to upgrade their conventional chemical techniques, facilities and production control level and to achieve flexible, diversified and efficient production of polyesters, terylene, viscose fiber, nylon and acrylic fiber to increase the added value of the products. Speed up the development of multi-functional and differential fiber and the series