China’s textile industry is suffering under the country’s new anti-trust laws, which could force the industry to shut down, according to a new report.
The country’s textile trade is valued at nearly $8.5 trillion, and the country has been grappling with a string of new anti, anti-local, anti‑foreign and anti-government regulations since January.
In March, the China Association of International Textile Trade (CAIT) said that textile tariffs were “stifling the domestic industry”, and that it had received hundreds of complaints from domestic manufacturers.
CAIT has since launched a campaign, called “Textile Suppression”, to urge the Chinese government to remove restrictions that would restrict textile production.
The report comes as the government moves to regulate the textile industry.
On Tuesday, China’s Ministry of Industry and Information Technology announced that it would regulate the industry under a “regulatory plan” published on the government website.
The plan “will promote the efficient use of materials, including the use of more efficient technologies and reduce environmental and social damage”, the ministry said.
The textile industry, which employs about 5 million people in China, is in the middle of a national strike to protest the government’s decision to limit the production of polyester, cotton and cotton fibre.
The strikes have become so frequent that some of China’s largest brands, including LG, Huawei and ZTE, have stopped production of their products in China and have begun using foreign raw materials instead.
In the report, CAIT said that China’s factories were “in the process of being shut down”, which could affect the industry as a whole.
“We estimate that the textile sector has been stifled for years and has seen a significant decline in production,” the report said.
“In the past five years, production of textiles has fallen by almost a third and, as a result, the country is facing a serious problem in reducing production, which is very expensive.”
The textile sector is the second largest manufacturing sector in China after auto manufacturing.
China is the world’s biggest textile exporter.
According to CAIT, the textile industries are “stifled” by the anti-foreign and trade barriers introduced by the new anti‑monopoly laws, as well as by a “growing number of regulations that have become redundant” and “have led to a number of factory closures, layoffs and industrial closures”.
“There is a growing risk of serious disruptions in the supply chain, and these are also likely to worsen as new regulations are introduced,” CAIT added.
The government is also facing pressure from its business allies to crack down on the countrys manufacturing sector, as they are facing a $3.3 trillion deficit in the first three months of the year.
The deficit will rise to a $4.3 billion shortfall in the final three months, according the latest IMF report.
In response to the report on Tuesday, LG said that the company “remains committed to continue manufacturing and distributing high-quality products to China and will not halt our efforts to achieve the highest standards of quality in the world”.
Huawei, which has been the top-selling smartphone brand in China for the past six years, has also been vocal in its criticism of the governments new anti‐monopoly regulations.
The company has also warned that it is considering its options in the coming months, as it continues to produce its smartphones in China.