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Towards the end of 2020, China’s foreign trade surplus reached its highest ever recorded value, exceeding US$75.4 billion in November. Behind this figure is the export growth rate of 21.1% that month. In May, this figure was still negative.

China's foreign trade situation has reversed within half a year. In June 2020, the General Office of the State Council also issued a document to support the transfer of export products to domestic sales. The rescue of foreign trade enterprises was the topic of the time.

How did the reversal happen?

From the November 2020 National Export Key Commodity Value Table released by the General Administration of Customs, it can be found that the commodities with the highest increase in cumulative exports from January to November over the same period in 2019 are medical instruments and equipment, an increase of 42.5%, ranking No. The second place is textile yarns, fabrics and products with a year-on-year increase of 31%, and its increase in the month is also close to 21%.

As a low-profit commodity, along with factors such as rising labor costs and the Sino-US trade war, some textile trade orders have already flowed out of China.

The foreign trade of China's textile industry has "unexpectedly" growth in 2020. However, behind it is the embarrassment that it is difficult for companies to make profits.

Order surge

In fact, China's textile exports performed well before November 2020. The year-on-year growth rate of exports in April has turned positive. The monthly export volume in May exceeded US$20 billion, a year-on-year increase of 77.3%.

In the fourth quarter, the export value of towels to the United States exceeded US$50 million. Even before the epidemic, such a single-season export value was not easy to achieve.

According to data from the National Bureau of Statistics, from January to September 2020, the export delivery value of domestic textile enterprises above designated size fell 6.05% year-on-year, but it has achieved positive growth in the third quarter, an increase of 9.34%, and an increase of 19.56% in September.

In addition to home textile products, export orders for fabrics have also surged. A quarter of the world's fabrics are traded in Keqiao, Shaoxing every year. The foreign trade prosperity index in the Keqiao Textile Index released locally shows that in November 2020, it increased by 10.4% year-on-year to 911.77 points, the highest value since 2019.

So, given the weakening of conventional textile exports in the first half of 2020, where did the surge in foreign trade orders in the second half of the year come from?

Order backflow

The direct manifestation of the counterattack demand in overseas markets, especially the US market, is the increase in orders during the Christmas season. For textile companies, especially home textile companies, they start to receive orders for the Christmas season every August, most of which are products with holiday elements.

"Eaten" profit

The situation where the orders of home textile companies are scheduled to be three months later is "rare in history", and a person in charge of a freight forwarding company sighed to the reporter, "I have been a freight forwarder for more than ten years, and I have never encountered such a situation before." Refers to the looting of containers and rising sea freight.

On December 31, 2020, the China Export Container Freight Index (CCFI) released by the Shanghai Shipping Exchange broke through 1,600 points for the first time, reaching 1,658.58 points, setting a record high. The CCFI record has been continuously refreshed in 2020.

Behind the increase in shipping costs is the tight supply of containers.

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