It is getting more and more obvious that domestic economy is showing recovery momentum from the worldwide economy recession. Textile economy also incessantly indicates signs of restorative strength which undoubtedly has a positive effect for the second half year investment disposition making the overall investment run smoothly in the right track.

Industrial investment grows month after month
Influenced by the restorative momentum of the whole industry, confidence in textile industry investment orientation gradually restored. Additionally also affected by the national macroeconomic favorable policies like increased rebating tax ration and etc, financing situation of the whole industry has been getting better along the way leading to an increased investment growth compared with year beginning. Statistics unveiled by China National Textile and Apparel Council indicated that over-scale fixed asset investment has mounted up to 134.8 billion RMB, although 7.89% downturn in contrast with last year, still a 6.35% growth year-on-year and 0.65% speedup than the first five months which is also the fourth consecutive growth since after March this year. Analyzed in time quantum, investment speedup from January to February is -9.78%, January to March -2.05%, January to April 1.61%, January to May 5.7% and January to June 6.35%. Analyzed in new program commencement which is more representative for future investment orientation, 3930 new programs were launched from January to June which is 22.05% growth. Analyzed geographically, Provinces of Jiangsu, Shandong, Hebei, Henan, Zhejiang and Jiangxi have taken up 64.34% of overall industrial investment. These aforementioned statistics has indicated a gradually warming up investment situation and successive confidence recovery.

Future investment structure still needed to be closely watched
It is indeed good news that industry investment confidence gradually recovered which is fundamental to the whole industry restoration. Nonetheless, it must be clearly aware of the potential risks still widely exist. On the one hand, economic situation in European Union, USA as well as Japan is still wandering in the swampland and the international consuming demand remains weak. Domestic market cannot be too optimistic either. Limited domestic demand and increased homeland sale have put too much burden on the market shoulder. On the other hand, downstream raw material price keeps increasing which undoubtedly poses another threat to company survival. All these uncertainties may have negative effect on textile industry investment.

Fixed asset investment in Cotton spinning industry reached up to 23.8 billion RMB, 4.13% year-on-year. It is predicted that investment situation in the eastern area would keep deteriorating while middle and western area investment will keep increasing. Accompanied with national favorable investment policies to the mid-west, cotton spinning and chemical fiber industry investment in Xinjiang would maintain its current increasing momentum and this momentum is widely predicted to maintain in the second half year.

Investment orientation must go in line with structure upgrade
For many years, textile industry has shifted its attention trying to prevent product capacity surplus but now we still have 2.3 million tons of obsolete chemical fiber that are supposed to be eliminated long time ago. Economy recession led to domestic demand shrinking down both home and abroad. Raw material prices also underwent severe fluctuation. All these negative factors slowed down the profit-gaining capability of the whole chemical fiber industry. It is extremely urgent for this sector to upgrade current product structure and enhance the overall competitive capability. National policies always inclines to Xinjiang Autonomous region. Many cotton spinning mills and chemical fiber mills were newly established which would to a great extent change Xinjiang`s current role as raw material output source and improve the livelihood of inhabitants.

Government has been calling for too long eliminating obsolete productivity. It is the mills themselves unwilling to or showed no voluntary willing to change. Every sector in textile industry is closely connected and therefore harder to adjust in a specific area. That is why industry investment and scale enlargement need to be more cautious.

Source: China Textile Leader