Analyze the problems faced by China's textile and garment industry in 2010

With the gradual recovery of the global economy and the cumulative impact of supportive policies for the textile and apparel industry becoming more evident, China's exports in this sector are at a crucial stage of stabilization and growth. However, the industry still faces several significant challenges that could hinder its long-term development. First, the profit margins of textile companies have been shrinking. Since 2009, as market conditions for cotton yarn and fabric improved, domestic cotton demand has increased, leading to rising prices. As of February 26, the price of Grade 3 cotton reached 14,990 yuan per ton, an increase of 0.75 percentage points compared to the beginning of the year (14,879 yuan/ton), and a staggering 31.08% higher than the same period in 2009 (11,436 yuan/ton). This sharp rise in raw material costs is not matched by corresponding increases in end-market prices, squeezing company profits. Additionally, with the recovery of the domestic economy, the RMB is expected to appreciate again in 2010, further pressuring profit margins. Second, international trade protectionism is on the rise. In response to the financial crisis, many governments have implemented measures such as raising safety, hygiene, and environmental standards, along with anti-dumping and countervailing duties, to protect their own industries. In 2009, under the WTO’s trade remedy framework, over 30 investigations were initiated against Chinese textile products, including chemical fibers, curtains, electric blankets, and various cotton and linen products. In January 2010 alone, there were 14 cases of product recalls from China, including children’s toys and clothing, affecting countries like the U.S., Canada, and Hungary. Year-to-date, more than 10 anti-dumping and countervailing investigations have been launched against Chinese goods, targeting products like polypropylene and polyester staple fibers. Third, carbon emission regulations are increasingly being used as a tool to restrict Chinese textile exports. Following the Copenhagen Climate Conference, the focus on low-carbon economies has intensified, prompting stricter controls on pollution and energy use. Textile and garment manufacturers, especially those involved in printing and dyeing, face greater compliance pressures. Meanwhile, developing countries participate in carbon trading mainly through the CDM mechanism, but China remains at the lower end of the value chain, with overseas markets and standards dominated by developed nations. These technical barriers, combined with new CO₂ emissions criteria, may serve as another excuse to limit Chinese textile exports. Fourth, labor shortages have become a nationwide issue. After the Spring Festival, many regions experienced a severe shortage of workers, forcing companies to raise wages and relax hiring criteria. Unlike previous years, the problem is no longer limited to the Pearl River or Yangtze River Deltas—labor-scarce areas like Anhui are also struggling. Many textile companies in these regions have raised salaries and reduced restrictions on gender and age to attract workers. Industry experts suggest that while economic recovery and increased orders are visible triggers, the root cause lies in the end of the cheap labor era. Migrant workers are no longer willing to accept low wages that do not match the intensity of their work, making it harder for companies to fill positions. As a labor-intensive industry, the textile and apparel sector is particularly vulnerable to this growing labor crisis.