China has recently declared its 12th Five Year Plan focusing more on its textile and apparel sector. Will it be competent enough to convert the country into a global powerhouse?

China passed the 12th Five Year Plan on March 14th, 2011. It mainly aims to address inequalities, and create options for a more sustainable environment, equal distribution of wealth, increase domestic consumption, and enhance social infrastructure. The plan mainly targets to increase the GDP growth by 8% in 2011, 7% annual growth of per capita income, spend 2.2% for R&D on GDP by 2015, to adjust income distribution, and control the increasing housing prices. Chinese Government has set a 7% GDP growth target, but industry analysts predict that annual growth would exceed 8%. By comparison, the 11th five year plan called for an annual growth of 7.5% while the actual growth was around 11%.

The 11th Five Year Plan (2006-2011) had created significant results in bringing the concept of harmonious society. The proposed 12th Five Year plan focuses more on high value added products and services. Therefore, low end manufacturers have a possibility to face pressure. Industries which face overcapacity will have to merge. The Government will be cautious in the exchange rate policies, and will not allow any revaluation. It will however let their currency to strengthen against the US dollar.

Textile Industry Focus:

China's textile and garment industry has gone through a drastic growth during the past years. The country accounts for 40% of the total fibre output of the world. It also takes the lead in the manufacture of chemical fibres, yarns and garments. The 11th Five Year Plan accelerated China's textile sector performance. By the end of the period, China became the second largest economy in the world. The 12th Five Year Plan proposes a Technical Progress Outline for textile industries with an intention to make China; take over the global textile industry by 2020. The five year period would be crucial for China to intensify industrial restructuring and upgrading. This would ultimately speed up the growth of textile industries, making China a dominating player in the global textile and apparel market.


Service sector jobs will be increased improving the living standards of Chinese citizens. Analysts predict that minimum wages will increase by more than 13% for a year. Companies may have to consider options for shifting their operations to inland regions with cheaper labor costs. The 12th Five Year Plan proposes the textile industry to make a breakthrough in 50 technologies in the areas of spinning, weaving, printing, dyeing, textile processing, and environmentally friendly technologies. China is chalking plans to include recycling textiles into the 12th Five Year Plan to save energy, and also work on environmental concerns. Global textile industry is predicted to have a growth rate of 6.5%. This would create a favorable environment in China's textile industry, and gain a profitable access for the country in the international market.


China, in the coming five years would put all efforts to promote technical advancements and develop the countrys economy. It would use all favorable conditions to maintain its current position as a key player in the global textile and apparel market.


References:


1)     Data source: kpmg.com

2)     adsaleata.com

3)      globaltimes.cn