One third of China’s cotton-spinning industry revealed 96.7 percent of total profits for the whole industry, indicating that most cotton spinning companies are currently unprofitable. The rapid development of China’s cotton-spinning industry in the previous decade resulted in fast expanding capacity, said Xu Wenying, deputy director of China National Textile and Apparel Council. After the breakout of the global financial crisis, overseas demand contracted significantly and competition in the domestic market became fierce. Overcapacity led to falling profits. Chinese cotton spinning mills have very few products that have high added-value and their out-of-date technology and equipment could not meet high-end market demand. Eliminating out-of-date capacity and implementing industry upgrade have become top issues for China’s cotton-spinning industry. In addition, China’s cotton spinning mills now face high taxation as well as financing difficulties, Xu noted. Banks are very prudent in issuing loans to spinning industry, while private financing lacks policy support and leads to a high cost.
People’s Daily Online