Prices fall even as capacity expands
US customs data from the Office of Textiles and Apparel (OTEXA) show that China’s average apparel import price declined from $*.** per square metre equivalent (SME) in **** to $*.** per SME in ****, a drop of about ** per cent. Chinese apparel entering the US now costs roughly half the global average of $*.** per SME.
The National Council of Textile Organizations (NCTO), representing the US textile industry, argues that this pricing pattern reflects structural overcapacity rather than normal market competition. In its July *, **** submission to the Office of the US Trade Representative (USTR), the NCTO stated that Chinese manufacturers have continued operating at high production levels despite weakening profitability because of sustained government support.
Chinese apparel manufacturing profits declined **.** per cent in ****, yet production continued to increase. In competitive markets, falling profits typically result in lower output. The persistence of capacity expansion despite deteriorating margins has strengthened Washington’s argument that state support is sustaining production beyond commercial demand.
