Textile and Apparel: Development Countermeasures for Traditional External Demand Overcapacity Industry

Editor:浙江方圆聚合纤有限公司 │ Release Time:2018-09-19 

Recently, due to the European debt crisis, shrinking foreign demand, trade barriers, inflation, appreciation of the renminbi and rising factor costs, China's foreign trade growth rate has declined. Under the background of increasing export pressure, there is still a kind of industry in China that can be called external demand overcapacity, that is, those with a large share of total output or exports have an important role in digesting their total output. Industries with overcapacity are more worthy of attention.


China's external demand overcapacity industry includes traditional industries such as textiles, shoes and hats, luggage, and other emerging industries such as wind power equipment, polysilicon, and photovoltaic solar cells. The development status of such industries is as follows: First, the domestic demand for textiles, shoes, hats, bags and other traditional industries is almost saturated. Although the export volume keeps growing, the added value of products is low, and the low-end production capacity is still stimulated by export growth. The trend is to expand; second, emerging industries such as wind power equipment, polysilicon, and photovoltaic solar cells. With the continuous release and opening of production capacity in recent years, there will be serious domestic demand shortages, and exports must be relied upon to absorb excess capacity in such industries, but There is fierce competition in the international market.


In an international economy environment that is not prosperous, how can the industries with excessive external demand capacity go out of the predicament? The author believes that support and assistance are needed in the following areas:


First, the use of relevant fiscal and taxation policies to encourage exports and expand domestic demand.


For the external demand overcapacity industry, maintaining and increasing exports is crucial to alleviating the contradiction between overcapacity and insufficient domestic demand in the short term. From the perspective of policy effects, the export tax rebate policy and the specific fiscal subsidy policy are relatively effective in regulating the scale of exports. However, from the perspective of the international environment of foreign trade today, countries are opposed to the financial subsidy policy of the countries that trade, often resulting in trade friction, and not against the export tax rebate policy that better reflects the principles of trade fairness and competition. Therefore, China should make full use of the export tax rebate policy to regulate the export scale and export propensity of the external demand-type overcapacity industry. While increasing the amount of exports, expanding domestic demand is also an effective way to solve the existing excess capacity in related industries. For traditional industries such as textiles, shoes and hats, luggage, etc., in recent years, a large number of such products have been exported to domestic sales in China, and the domestic demand space that can be tapped is extremely limited; for emerging industries such as wind power equipment, polysilicon, photovoltaic solar cells, etc. It is an industrial user. The main reason for the insufficient domestic market demand for such products is the slow development of supporting industries. Therefore, the external demand-type overcapacity industry needs substantial innovation in the policy of expanding domestic demand, and finds new consumption growth points.


The second is to strengthen the supervision and strictly limit the expansion of production capacity in related industries.


The scale of production capacity should be determined by the enterprise itself, but due to the incomplete information, the overall judgment of the market and industry prospects is often not accurate enough. Even in industries where information is relatively transparent, the choice of competitive strategies between firms can lead to collective irrational outcomes. Therefore, it is necessary to effectively supervise industries that are highly vulnerable to good industry prospects and that cause many companies to rush to the top, leading to overcapacity. In order to strictly limit the blind expansion of the production capacity of the external demand industry, relevant departments of China should strengthen the following aspects of supervision: First, further improve relevant industrial policies, timely update and release the "Industrial Structure Adjustment Guidance Catalogue", and further improve the external demand-type overcapacity industry. The second is to strengthen the environmental pollution assessment and supervision of relevant industries, especially for high-energy-consumption and high-pollution projects such as polysilicon. Projects that have not passed the environmental assessment approval are not allowed to start construction. The third is to strengthen the construction of various types. The project land supervision will regulate the land transfer behavior of local governments; the fourth is to strengthen the guidance and supervision of macro credit policies, guide and supervise financial institutions to improve and improve credit review; the fifth is to strengthen the monitoring of industry capacity and capacity utilization, and timely release industrial policies. Guidance and industry scale, social needs, production and sales inventory, corporate restructuring, pollution emissions and other information.


The third is to encourage the development of high-end technology and adjust the technical structure of related industries.


China's external demand-type overcapacity industry is mainly characterized by a serious surplus of low-end technology products in the industry, but the high-end technology products with strong competitive advantages in the industry are relatively insufficient. Therefore, while strictly controlling the expansion of production capacity in related industries, China should encourage the development of high-end technology products in the industry and focus on adjusting and optimizing the technical structure of the industry. For example, the textile industry should actively develop industrial textiles, and promote the technical restructuring of the textile industry with its high technical content and wide industrial penetration. The wind power equipment industry should vigorously develop offshore wind power projects and actively cooperate with coastal countries or coastal cities and provinces in China. The energy sector and power companies have established links to strive to develop new offshore wind power projects and create new competitive advantages in the international wind power equipment market; the polysilicon industry should pay attention to the development of high-purity polysilicon, and strengthen the industrial chain extension and alliance, polysilicon Enterprises should strengthen integration and alliance with upstream and downstream enterprises such as photovoltaic solar cells, and develop more competitive and profitable photovoltaic solar products through industrial chain extension.


The fourth is to promote the “going out” of the overcapacity industries.


In the long run, under the influence of multiple factors, the growth momentum of China's foreign trade will gradually slow down. Therefore, it is impossible for China to rely on exports forever to resolve the contradiction between overcapacity and insufficient domestic demand. Foreign-capped overcapacity industries can choose to “go global” and gradually export domestic excess capacity by investing in factories and operations abroad. In this way, it is beneficial to both the development of the enterprise and the development of the macro economy. The specific strategies are as follows: First, textiles, shoes and hats and other traditional external demand-type overcapacity industries. By “going out” to produce, sell or export products in other countries, they can bypass the trade barriers of relevant countries; Going global, you can make full use of the purchasing power advantage formed by the appreciation of the renminbi, seize the opportunity of the global economic cycle at a low stage, acquire foreign low-cost and high-quality strategic assets through foreign direct investment and other means of foreign direct investment; third, encourage wind power equipment and polysilicon. The “going out” of industries with large investment in projects will also promote the reduction of the balance of foreign exchange reserves while helping to alleviate domestic inflationary pressures. The fourth is wind power equipment, polysilicon, photovoltaic solar cells. Such emerging industries can make direct use of “technical catch-up” foreign direct investment, make full use of the reverse technology spillover of advanced technology clusters in developed countries, and promote the upgrading of technological upgrading and independent innovation capability of enterprises, thus contributing to the structural upgrading of relevant domestic industries. .


(Author: Institute of Economic and Social Development, Dongbei University of Finance and Economics)


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