2010 is undoubtedly a key year for the recovery of world economy; China is of no exception, especially for the traumatized textile industry. Propelled by the ever-thriving domestic demand and stable domestic macroeconomic tendency but also overshadowed by the unstable world economy, China textile industry gladly witnessed a good start of the year 2010. All figures indicated that the overall situation of China textile industry maintained steady and positive.

Primary indexes indicated a favorable year´s outset
Influenced by the progressively recovering market demand, the production of China´s textile and apparel companies kept accelerating. Statistics unveiled by the Statistics Center of China National Textile and Apparel Council indicated that all 53.3 thousand above-scale textile companies of the first two months of 2010 realized an accumulated output of 567.3 billion RMB, rose by 27.05% year-on-year. Chemical fiber industry and textile machinery industry witnessed the most conspicuous upturn and respectively rose by 49.21% and 71.04% as compared with the same period of last year.

The output of major textile products also maintained an increasing tendency. Specifically, chemical fiber output of the first two months reached 4.25 million tons, increased by 17.11% with growth velocity rising by 13.27 percentage points year-on-year; yarn output reached 3.58 million tons, increased by 26.52% with growth velocity rising by 20.61 percentage points year-on-year; fabrics output reached 10 billion meters, increased by 50.98% with growth velocity rising by 56 percentage points year-on-year; garment output reached 3.559 billion articles, increased by 17.15% with growth velocity rising by 23.76 percentage points year-on-year.

Consolidated domestic demand
Domestic consumptive motivation remains very high since the beginning of 2010 and the thriving domestic demand is still the dominating factor buttressing up the development and recovery of China textile industry. From January to February, sales of above-scale textile companies reached 555.4 billion RMB, rose by 27.08% year-on-year, in which domestic sales accounted for 451.2 billion RMB, rose by 30.35% with growth velocity increased by 23.72 percentage points year-on-year. Domestic sales now account for as much as 81.24% of overall sales revenue, rose by 2.04 percentage points year-on-year.

Export kept increasing
The first two months of 2010 reversed the negative export situation of textiles and apparel of 2009. Statistics from the General Administration of Customs indicated that overall exported value textiles and apparel reached $28.2 billion, increased by 28.98% with growth velocity rising by 43.45 percentage points as compared with the same period of last year. Amongst the exported textiles, yarns, fabrics and end products contributed about $10.2 billion; apparel was exported $18.1 billion, respectively increased by 39.5% and 23.8% year-on-year.

Latent pressures and uncertainties still widely exist
Currently the production, domestic sale and export of textile industry all indicated positive upturning tendency. Nevertheless, what is noticeable is that the base of last year was very low therefore caused possibly overestimated indicators. Considering the complicated environment, many uncertainties still widely existed.

Labor shortage woe
Many eastern textile companies are suffering from severe labor shortage contrasted by the seemingly warming environment. Part of the eastern textile companies even raise the salary of employees to as much as 30%.Labor cost becomes another key factor testing the fate of a great number of textile companies.

Exchange rate fluctuation
RMB appreciation is the most highlighted topic recently. RMB has appreciated 5% to EUROs and 7% to GBP since the beginning of 2010 although the exchange rate to USD maintained comparatively stable around 6.827. RMB appreciation to USD would be devastating for over half of the companies engaging in textile business.

Raw material cost upsurge
Chinese domestic cotton price witnessed a very quick upswing since the beginning of 2010. China Cotton Index (CC Index) of Type 328 in March, 2010 reached 15.425 thousand RMB/ton which is 20.22％ of increase as compared with the annual average price of 2009(12.831 thousand RMB / ton). As of March 23rd,