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The textile industry of china has recently grown remarkably and it plays a very vital role in the domestic economy of china both as a source employment to the citizens of china and as well as a source of revenue from the foreign exchange. The textile export from china has a global share of approximately 17%. Nowadays china is the leading exporter of clothing and textile products to the European Union ahead of turkey, morocco and Tunisia combined together.it is expected that once the ATC liberalization finally comes into effect, the EU will significantly increase the importation of clothing and textile products from China. China became a member of WTO in the year 2001 and since then there has been a decrease in the tariff rates and opening of distribution markets and domestic retails. Since the replacement of Multifiber arrangement by the WTO agreement regarding the clothing and textile at the end of 2004, China has improved significantly on the integration into the (GPNs) global production networks (Qiu, 2005).

2. Population in China

China is not only the largest exporter of textile but also the potential buyer of the textile products which as a result of fast growing market domestically. China has a very high population of about 1.3 billion and a high rate economic growth and this factor makes china be the leading consumer market for the textile and clothing industry. The large population of china also offers a profitable business opportunity for the whole world as a result of increased clothing and textile per capita consumption year by year. The per capita consumption of fiber in china has risen from 4.1 kg in the year 2000 to about 20.3 kg in the year 2008.with the china’s large population and potential economic growth; it offers a very promising market which is potential to a large number of exporters.

3. China GDP

China is going through an industrialization and urbanization process and hence it is likely to become a market-based economy.as a result of this process many rural residents have moved to urban residents thus providing a dual structure of the Chinas’ consumer market currently.in the year 2009, the per capita GDP of china reached 3,678 US dollars and therefore it is predicted that the Chinese consumer will definitely increase and have a strong purchasing power. The lifestyle of the Chinese consumers is currently going through a tremendous change and the domestic market for the textile and clothing is becoming versatile, segmented and fashionable. With the increased demand for a comfortable dressing, many consumers prefer clothes of high quality made of natural fiber and pure cotton (Francis, 2007).

4. Social Problems which affect China trade

When china joined the WTO there has been more challenges and opportunities to the domestic textile industry. China has in the past enjoyed a comparative advantage through cheap labor but this advantage is currently decreasing. Another major problem is the over capacity which has resulted to reduced profit margin. China is use of old-fashioned machineries and equipment plus low technology by china is also another challenge facing trade in china.

In addition, poor management, increased debt burden particularly in SOEs, poor promotional and marketing skills and also controls in both exports and imports has led decreased profits in the textile industry.

5. Ethnic factors affecting trade in china

China is a country with diverse ethnic groups with Hans being the majority. Studies have shown that there is negative relationship between the growth of the economic and the ethnic diversity in Chinese provinces. From the ethnic homogeneity to heterogeneity the growth rate reduces between 2% to 2.5% points. This depends on the ethnic diversity.

6. Religious factor

Religion in china is one of the elements which affect trade in china. The homogeneity of the religion and its tolerance to other religions affect the type of people to do business with.it also affects the type products the consumers are supposed to buy and the seasons to make such a purchase.

7. Inflation and Trade balance in China

Chinas’ inflation dynamics has concealed ac cyclical pattern at the end of 1970. Liberalization of price in china has led to rapid increase in price in 1980s at reached its peak of 18.5% in 1988. There have been two episodes of mild deflation which has been experienced in china. The two episodes was experienced in 1998-2000 and between 2001-2002.The inflation rate showed persistence but it appeared to be reverting ( world bank group, 2015).

8. Foreign debt of China

The external debt of china has risen very rapidly within the past years according to the official data collected. The main reason was attributed to surge due to international funding as compared to domestic funding. The external indebtedness has stayed flat about 9% of the china gross domestic product. However, despite the rapid increase in the external debt, it has remained flat since 2008 (García, 2014).

References:

world bank group. (2015). China Economic Update. New York: world bank.

Francis, M. (2007). The Effect of China on Global Prices. Bank of Canada Review , 13.

García, A. (2014). Taking stock of China’s external debt. china economic watch , 1-5.

Qiu, L. D. (2005). China’s Textile and Clothing Industry. Hong kong: HKUST.