The launch of Belt and Road
Initiative by the Chinese government has triggered significant economic growth,
particularly in China and her neighboring countries. The role of Initiative in global economic
development is even more
important when the US trade
protectionism is re-emerging.
This
year marks the fifth anniversary of the Belt and Road Initiative (BRI).
According to the latest statistics released by the Department of Outward
Investment and Economic Cooperation, Ministry of Commerce, in the first half of
2018, the total direct investment of Chinese enterprises in 55 BRI countries amounted to US$7.68
million, a decline of 15% from the same period of the previous year, and at 12.3%
of the total amount in the same period. Major countries include Singapore,
Laos, Malaysia, Vietnam, Pakistan, Indonesia, Thailand and Cambodia.
The
figures released by the Department of Foreign Trade, Ministry of Commerce,
indicated that the trade between China and BRI countries grew by 11.3% in
the period of January to July of this year. In addition, the Initiative
has been recognized by more and more countries, with five more countries
becoming a part of it in the first half of this year.
The
recent released “Big
Data Report on Trade Cooperation under the Belt and Road Initiative 2018” by Belt
and Road Big Data Centre of the State Information Centre covers the development
progress and trend of the Initiative in depth.
Imports
surpass exports in
growth rate
According
to the above report, the total imports and exports between China and BRI countries turned positive in
last year after
two consecutive years of negative growth to US$ 1440.32 billion and accounted for 36.2%
of the total import and export trade of China. It also marked a growth of 13.4%
from the same period of the previous year and 5.9% higher than the growth
rate of total
export of China.
The
total exports from China to BRI countries
amounted to US$774.26 billion and grew by 8.5% from the same period of the
previous year or accounted for 34.1% of the total exports of China. The total imports to China amounted to US$666.05
billion, resulting in a growth of 19.8% from the same period of the previous
year or accounted for 39.0% of the total imports of China. To China, this
was the first time in five years that the growth rate of imports surpassed exports.
The
top 10 trade partners were Korea, Vietnam, Malaysia, India, Russia, Thailand,
Singapore, Indonesia, the Philippines, and Saudi Arabia. The volume of imports
and exports between China and these countries accounted for 68.9% of the total
volume of import and export trade between China and BRI countries.
Last
year, the total imports and exports of Eastern China and BRI countries amounted to US$1149.41 billion, marking 79.8%
of the total imports and exports between China and all BRI countries.
Meanwhile, Guangdong,
Jiangsu, Zhejiang, Shandong, and Shanghai were the top 5 trade partners with BRI
countries in import and export trade, which together accounted for 67.8% of the
total. Shandong was ranked among the top 5 trade partners for the first time.
Xinjiang, Hebei, Sichuan, and Shandong enjoyed the fastest growth rate of over
35%.
The rise of the ASEAN countries
According
to the statistics released by China Chamber of Commerce for the Import and
Export of Textile and Apparel, being the third largest export market of textile
and apparel of China, the ASEAN
countries were the prime force driving overall exports last year.
It also
enjoyed fastest growth among the four major markets (EU, USA, ASEAN and Japan).
The pragmatic cooperation between China and ASEAN countries unveiled
full-fledge development under the advocacy of the BRI. Besides, the cooperation in
infrastructure has also been geared up.
Among
the ten ASEAN countries, Vietnam is still the largest market for China and the
popular choice of Chinese textile enterprises for foreign investment. Other countries like Myanmar
and Thailand are on the rise.
The
minimum wages of Myanmar is the lowest among the ASEAN countries. Furthermore,
low import duties on supplies for industrial production made the country more competitive
in production cost as compared with other countries in the region. In addition,
Myanmar enjoys preferential treatment from EU and Japan for duty-free import,
which makes this country even more attractive for investors.
According to the
forecast of the Myanmar Textile Manufacturing Association, the export value of
textile in Myanmar will reach US$10 billion in 2024, representing a growth of 10 times as compared with the
same period of the previous year. In addition to the establishment of a
large-scale textile industrial park to attract foreign investment, Myanmar will
also develop world-class textile product laboratories.
Among all the ASEAN
countries, Thailand is the only country housing the textile production from upstream to downstream, but the country does not produce raw materials.
As such, the country imports raw materials from China at a low cost.
The construction of
the Bangkok-Nakhon Ratchasima railway section was kicked off in September of last year. The 253 km route is a railway
joint-venture between China and Thailand under the BRI framework for interconnection.
Under this arrangement, the textile trade between China and Thailand is expected to thrive further.
Along with the textile
production base, Thailand is also a high potential consumer market. According
to a survey conducted by Lifestyle Monitor of Cotton Incorporated, Thailand consumers
spend US$10 billion on clothing in 2018. By 2030,
the market will be increased by 81%.
Strong demand in India
The
Indian textile industry also grew rapidly over the last few years. Several
market surveys indicated that the strong domestic consumption and export will
allow for a market size of US$220 billion by 2021. Currently, domestic
consumption accounted for 65% and the remaining 35% are exports.
India
has a high proportion of spindle and spinning frame of the global volume,
accounting for 24% and 8% respectively. At the same time, India also has the
largest number of weaving machines (including manual weavers), accounting for 61% of the world
market.
Furthermore,
India is the second largest production country of fiber and the third largest
production country of cotton in the world. In which, the production of fiber
accounted for 83% of the total market. In addition, the production volume of
man-made fiber is also increasing substantially.
The
Indian government has recently
proposed a draft plan to build up an e-commerce market for the development of
local firms and “Made in India” Initiative. This draft plan suggests that the e-commerce
platforms held by Indian companies can hold inventory of 100% “Made in India” products.
It is believed that such proposal will be favorable for the development of
local textile and apparel industry.
Africa an upcoming promising market
Due
to its abundant resources and low labor cost, Africa is a market of
high potential.
Indeed, some Chinese textile enterprises have
already established their facilities in Africa, so as to increasetheir competitiveness.
The
7th China-African Union Strategic Dialogue was held earlier this
year. This meeting provided positivethrust to
the cooperation and development between two parties under the BRI.
Egypt
is strategically located at the crossroads of three continents: Asia, Africa,
and Europe. The country is also the intersection of “The Silk Road Economic
Belt” and “The 21st-century Maritime Silk Road”. Given its distinctive
geographical advantage, the
on-going Suez Canal Corridor Area Project offers lucrative opportunity for
investments.
The
textile industry accounts forabout 27%
of the total production value of the manufacturing sector in
Egypt. The textile industry is also one of the key development
industries in the country. In its development plan 2025, the Egyptian
government plans to
provide preferential treatment to attract foreign investment and create 100
million jobs with an increase in exports to US$10 billion.
Ethiopia
is also turning herself into an industrial
manufacturing center of
Africa. The country’s Prime Minister, Hailemariam Desalegn, mentioned in
several instances that Ethiopia has been adopting industrialization as a state
development strategy. Someleading Chinese
textile enterprises have
started or planned to establish production plants in Ethiopia.
European associations share views
on Belt and Road InitiativeCTA
interviewed the major European textile machinery associations to understand
what the European sectors think about the impact of the Initiative as well as
the potential developments of the Chinese and Asian markets.
French Textile Machinery Manufacturers’
Association (UCMTF)
"Your
question (about the Belt and Road Initiative) is certainly a very important one
as the world may enter into slowing global commercial exchanges,” said Ms
Evelyne Cholet, Secretary General of UCMTF.
She
told CTA: “The Initiative will certainly benefit such countries as Pakistan,
Sri Lanka, Bangladesh, Thailand, Vietnam and India which already have strong
textile industries with phenomenal national characteristics.”
At
ITMA ASIA + CITME 2018, UCMTF will be expecting to welcome many visitors from
China and also other Asian countries.
According
to the Association, China is the most important market for French textile
machinery, accounting for about 30% of its sales. Turkey is the second thanks
to its strength in carpet manufacturing. Among different sectors, technical
textile will certainly develop fast all over Asia and particularly in China.
“For
the next few years, even if China’s growth rate will slightly slow down, it
will still be astonishing rapid by our European standards,” said Ms Cholet.
UCMTF
expects China will still be the most important market for the years to come as
the country has become the world’s main textile producer and the need for
investments in best machines will be huge.
Association of Italian Textile
Machinery (ACIMIT)
ACIMIT
confirms that the Belt and Road Initiative definitely have positive effects for
the global textile industry, including both Chinese and Western companies.
Asia
is the main market for Italian textile machinery manufacturers. In 2017,
Italian sales reached a value of €964 million in Asia, representing a 9%
increase compared to the previous year. In the Q1 of 2018, the Italian textile
machinery exported to Asia totaled €205 million, with China still being the
most significant market, followed by India and Pakistan.
Made
in Italy textile machines provide technological solutions to meet the demands
of the Chinese and other Asian markets. Apart from constant investments in
R&D activities, Italian manufacturers’ commitments in sustainability make
their machines save more energy, water, raw materials and therefore the production
costs, emphasized Mr Alex Zucchi, President of ACIMIT.
VDMA Textile Machinery Association

On
the other hand, VDMA believes that it is still too early to assess how German
companies may benefit from the Belt and Road Initiative.
"The
Initiative helps to overcome the deficit in infrastructure in the covered
regions, so to expand economic and trade cooperation as the infrastructure
thrust will reduce trade costs. But many aspects of this big project are still
unclear,” explained Mr Thomas Waldmann, Managing Director, VDMA Textile Machinery
Association, Germany.
Regarding
the Chinese market, the textile sector is in the phase of transformation and
adjustment, commented Mr Waldmann.
"We
see Chinese textile enterprises focusing on higher efficiency and higher
product qualities. From that perspective, China will remain an attractive
market, because the VDMA member companies are well positioned to feed this
demand,” he said.
“Business
is more widely diversified across the markets of Asia today when compared to
the situation ten years ago, China is not the only story in Asia,” continued Mr
Waldmann. “The other big volume market is India which imported textile
machinery and accessories from Germany amounted nearly €300 million in 2017.”
For
Germany textile machinery, other important markets are Bangladesh, Pakistan,
Japan and Korea.
Swiss Textile Machinery
Association (Swissmem)
The
Swiss textile machinery sector also shares the same view that the Belt and Road
Initiative have a strong impact on the global business and economy, though it
still takes time to see which country and technology will benefit from it.
Meanwhile,
China stays as a very important and attractive market for the Swiss
manufacturers. China was the number one export market of Swiss textile
machinery in the first half of 2018 with a market share of nearly 15%.
“There
are two directions I see for the Chinese textile industry. When developing new
products and services, the integration of sustainability (environmental,
economic, social and cultural) is central. On the other hand, it is important
for China to offer high quality at the best possible price,” said Ms Cornelia
Buchwalder, Secretary General of Swissmem.
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