TCF POST Special Report
BEIJING — China’s textile industry is entering a new phase as softer apparel exports, resilient textile-material shipments, stronger domestic demand and rising two-way trade with Asian suppliers reshape its traditional role as the world’s manufacturing and export powerhouse. Ken Research estimates China’s textile market at US$636.6 billion in 2025, projected to reach US$849.7 billion by 2032, representing a 4.21% CAGR. However, the market contracted 8.2% in value in 2025, while capacity utilisation remained 77.5%. Textile-sector profit fell 16.1% and the profit margin declined to 3.5%, highlighting growing price and margin pressure. China textile outlook also identifies technological upgrading, sustainability, domestic consumption and international expansion as key growth factors, while labour costs, raw-material volatility and environmental requirements remain challenges.
Exports are increasingly shifting upstream
China’s textile and apparel export performance is becoming increasingly divided between textiles and finished apparel.
| China export indicators | 2025 | Latest 2026 |
| Textile & apparel exports | US$293.77bn | US$116.74bn Jan–May |
| Textile exports | US$142.59bn | US$59.49bn Jan–May |
| Textile export growth | +0.45% | +1.7% |
| Apparel export growth | -4.99% | -1.6% |
| Yarn export growth | — | +6.6% Jan–May |
| Fabric export growth | — | -0.5% Jan–May |
In January-May 2026, China’s textile and apparel exports increased only 0.1% year on year. Textile exports rose 1.7%, while apparel exports declined 1.6%. In January-April, yarn exports rose 7.7% to US$5.26 billion.
The contrast indicates that China is retaining greater strength in fibres, yarns, fabrics and other intermediate products even as finished-garment exports face greater pressure.
China is also becoming a bigger textile buyer
The most significant change is occurring on the import side.
| China textile imports | Latest figure | YoY change |
| Yarn + fabric imports, Jan–May 2026 | US$3.54bn | +26.8% |
| Yarn imports | US$2.65bn | +41.1% |
| Cotton-yarn imports, April 2026 | 178,000 tonnes | +66.2% |
| Yarn + fabric imports, Jan–Apr | — | +25.1% |
| Yarn imports, Jan–Apr | — | +38.8% |
China’s cotton-yarn sourcing map
| Supplier | Share of China yarn imports, MY 2025/26* | April 2026 |
| Vietnam | 55.7% | ~44% |
| Pakistan | 13.1% | ~12% |
| India | 9.7% | 17.7% |
*First seven months of marketing year 2025/26.
This is a major change in the regional sourcing equation. China is no longer simply the country from which Asian manufacturers source textiles. Chinese mills are increasingly sourcing selected inputs from Asian competitors and specialist suppliers.
Asia is becoming more important to China’s textile supply chain
| Market | Emerging role in China’s textile/apparel ecosystem |
| Vietnam | Major cotton-yarn supplier; major destination for Chinese fabrics |
| India | Cotton yarn and cotton-related materials |
| Pakistan | Cotton-yarn supply |
| Uzbekistan | Cotton and cotton yarn |
| Bangladesh | Apparel supplier to China’s domestic market |
| Cambodia | Growing apparel supplier |
| Indonesia | Yarn and apparel supply |
| Europe | Premium apparel, fashion and specialised products |
| Other markets | Fibres, machinery, materials and higher-value products |
The result is a more interconnected Asian textile economy rather than a simple migration of factories from China to lower-cost countries.
China’s domestic market provides another growth engine
China’s huge consumer market is increasingly acting as a buffer against weaker export demand.
| Domestic-market indicator, 2025 | Figure |
| Apparel, footwear & knitted-textile retail | >US$210bn |
| Retail growth | +3.2% |
| Per-capita clothing expenditure | +2.2% |
| Online wearable-goods retail | +1.9% |
| Apparel imports | US$10.2bn |
| Apparel import growth | -2.3% |
But the overall decline in apparel imports masks a strong shift toward Asian suppliers.
China apparel imports: selected supplier performance, 2025
| Supplier | Import change |
| Bangladesh | +23.2% |
| Cambodia | +12.1% |
| Vietnam | +5.5% |
| Indonesia | +3.3% |
| Italy | Declined |
| France | Declined |
| Portugal | Declined |
China is consequently becoming both a competitor and a customer for Asian apparel exporters.
Research by University of Delaware apparel scholar Sheng Lu, based on 8,000 apparel SKUs, also found growing integration of apparel from developing Asian countries into China’s consumer market, including lower-priced products and increasing use of recycled and organic fibres.
Vietnam demonstrates the new two-way supply chain
Vietnam provides perhaps the clearest example of how the regional textile relationship is changing.
| China–Vietnam textile relationship | Jan–May 2026 |
| Chinese fabric exports to Vietnam | US$44.6bn |
| Share of China global fabric exports | 15.8% |
| YoY change | -1.5% |
The production loop increasingly looks like:
Vietnamese yarn → Chinese processing → Chinese fabric → Vietnamese garment factories → global markets
At the same time, Vietnam’s yarn flows in the opposite direction into Chinese mills. This makes a simple “China versus Vietnam” sourcing model increasingly outdated.
China is losing some garment share but retaining upstream influence
| Major market | China position | Asian competitor |
| EU | 29.8% share | Bangladesh 20.9% |
| Japan | 46.9% share | Vietnam 18.7% |
| US | Share declining | Vietnam gaining |
| Japan since 2021 | Sewn-product exports declining | Vietnam & Bangladesh gaining |
China’s competitive position is therefore shifting from finished garments toward fabrics, yarns, fibres, chemicals, machinery, technical textiles and other upstream products.
Recent developments reinforce the limits of straightforward production relocation. Reuters reported in August 2026 that Shein had scaled back a major Vietnam manufacturing/logistics expansion, with many suppliers returning to China because the Chinese ecosystem remained faster, more flexible and cost-effective for its small-batch model.
The emerging model: China-plus-Asia
For global brands and textile manufacturers, the emerging model is increasingly China-plus-Asia, rather than simple China replacement.
| Country | Key opportunity |
| Vietnam | Yarn supply, garment manufacturing, Chinese fabric sourcing |
| Bangladesh | Garment exports to China + Chinese textile inputs |
| India | Cotton yarn and specialised textiles |
| Pakistan | Cotton yarn and materials |
| Cambodia | Apparel exports to China |
| Indonesia | Yarn and apparel |
| Uzbekistan | Cotton and yarn |
China retains advantages in scale, materials, machinery, chemical fibres, supplier density and speed.
China’s textile hubs are going global
China’s textile trading infrastructure is also expanding internationally.
| China Textile City, Shaoxing | 2026 |
| H1 transactions | 237.06bn yuan / US$34.96bn |
| H1 growth | +9.26% |
| Market-procurement exports, Jan–May | US$2.04bn |
| Export growth | +25.72% |
| Overseas centre | Dhaka, Bangladesh |
| Overseas warehouse development | Lagos |
The expansion of overseas centres, warehouses and digital sourcing platforms is effectively taking China’s textile marketplace closer to overseas buyers.
Investment is moving toward technology and higher-value textiles
| Indicator | 2025 growth |
| Textile-sector fixed investment | +4.3% |
| Chemical-fibre investment | +12.3% |
| Major textile categories recording output growth | 8 of 15 |
Key investment areas include automated weaving, functional finishing, recycled-fibre processing, technical textiles, advanced fibres, digital manufacturing, traceability and higher-value industrial applications.
China textile market: key numbers
| Indicator | 2020 | 2024 | 2025 | Outlook |
| Textile market value | US$593.2bn | US$693.4bn | US$636.6bn | US$849.7bn by 2032 |
| Textile & apparel exports | US$291.2bn | US$301.1bn | US$293.8bn | More diversified |
| Market growth | — | +4.0% | -8.2% | 4.21% CAGR |
| Capacity utilisation | — | 78.5% | 77.5% | Modernisation-led |
| Domestic apparel/footwear/knit retail | — | — | >US$210bn | Demand stabiliser |
What this means for Asia
Bangladesh: China’s domestic market is becoming an additional destination for Bangladeshi apparel, while Chinese yarn and fabrics remain critical inputs for Bangladesh’s garment industry.
Vietnam: Its role is particularly strategic because it is simultaneously a major yarn supplier to China and a major buyer of Chinese fabric.
India: Rising cotton-yarn exports to China create opportunity, although India continues to compete with China across fibres, fabrics and finished products.
Pakistan and Uzbekistan: China’s growing demand for cotton and yarn provides an additional market alongside Western destinations.
Cambodia and Indonesia: China’s growing apparel imports offer opportunities to diversify beyond US and European markets.
From “China factory” to “China hub”
China’s textile industry is moving away from the traditional model of “make in China, export to the world” toward “make in China, source from Asia, manufacture across Asia and sell globally—including inside China.” The important change is therefore not simply whether China loses manufacturing share. It is which parts of the value chain remain in China and which migrate to other Asian economies.
China’s finished-garment export position faces increasing competition, but its upstream ecosystem—fibres, yarns, fabrics, machinery, chemicals, technical textiles and integrated suppliers—remains exceptionally deep. For Asian exporters, the opportunity is consequently twofold: capture production shifting away from China while becoming suppliers to China itself.
The emerging Asian textile map is therefore less about China versus the rest of Asia and more about an interconnected production system in which China increasingly functions as the upstream, technology, sourcing and supply-chain hub, while Vietnam, Bangladesh, India, Pakistan, Cambodia and Indonesia expand their roles in selected materials, manufacturing and consumer markets.