Beijings One Belt One Road initiative currently incorporates more than 70 countries, including China

Beijing's 'One Belt One Road' initiative currently incorporates more than 70 countries, including China

The Chinese government has started to double down on driving increased Chinese investment in the textile industry in the Belt and Road Initiative (BRI) countries, notably in Central Asia.

In July, the China National Textile and Apparel Council (CNTAC) conducted fact-finding trips to Tajikistan and Uzbekistan, identifying these two central Asian countries as ideal targets for increased investment in textile production by Chinese companies. 

Specifically, the delegation lauded abundant water resources to generate electricity, low local wages, preferential investment policies, as well as substantial local cotton growing areas. 

In Tajikistan's case, the local cotton planting area is about 185,000 hectares, with an annual production of 100,000 tons of lint cotton, of which only 20% is used for domestically-oriented fabric production, according to a CNTAC briefing note. 

It adds there are more than 3,500 textile enterprises and more than 4,700 garment enterprises in Uzbekistan, with an annual output of 700,000 tonnes of cotton yarn, 1.2bn metres of fabrics, 140,700 tonnes of knitted fabrics, and 2.2bn garments, including 132m pairs of socks. 

Critical period

These moves coincide with a critical period for China's textile industry amid rising domestic wage levels and stricter anti-pollution policies, which are forcing Chinese companies to either invest in new tech at home – or move production abroad to countries with looser environmental regulation. 

Of course, when targeting Belt and Road Initiative (BRI) countries, which also include those in Southeast Asia, the Chinese government supports and encourages private sector foreign direct investment (FDI) in textiles and makes direct loans for infrastructure projects benefiting the industry.

CNTAC deputy president Duan Xiaoping points out in documents released following the fact-finding mission that while the speed of machine upgrades in China's textile industry will continue to accelerate, and the level of automation will be greatly improved, some enterprises will instead "opt to go global." 

Duan hopes that companies taking an international approach will seize the opportunity to promote win-win cooperation with the Central Asian countries. 

Countries and regions along the BRI have received over 80% of China's overseas textile investment in the last five years, according to CNTAC.

Among recent events that have aided the development of international contacts that could pave the way for new investments abroad by the Chinese textile sector was a Belt and Road Textile Cooperation Forum, held in Shaoxing, Zhejiang Province, in late September. 

Also taking place at around the same time in Shanghai was the inaugural meeting of the 'One Belt, One Road Textile Supply and Marketing Alliance,' bringing together more than 300 representatives from upstream and downstream enterprises, financial investment institutions, big data platforms and smart logistics in the domestic and international textile industry chain.

Key role for Turkey?

Shaun Rein, founder of Shanghai-based consultancy CMR and author of bestselling book 'End of Cheap China,' explains that a recent business trip to Turkey made him believe that Chinese textile planners' attention to the region will also be extended to Turkey due to a mix of economic and geostrategic factors.

"Relations between Turkey and the US and the EU have been growing increasingly testy [over Syria and Western initiatives to recognise the Armenian genocide], which causes the Turkish government to appreciate more closeness with China," Rein told just-style.

"The Chinese government has been building up Xinjiang [in northwest China] as a major textile centre, and there is a high likelihood that we will be seeing more textile linkages between Xinjiang and Turkey in future," he adds.

Turkey has been in the EU's customs union (CU) since 1995, which allows the country to trade manufactured goods without any tariffs or quotas. The CU has looser rules of origin than some free-trade agreements, making Turkey an attractive entry point for Chinese textile inputs into the EU market.

However, while Turkey's geopolitical positioning at the crossroads of east and west means the country will play a key role in trade routes and infrastructure promoted by BRI spending, it could also open the country to unwelcome competition, as well as aiding its export flows. 

Xinjiang concerns

More than 80% of China's cotton is grown in Xinjiang, but any supply chain links with Xinjiang in northwest China are increasingly sensitive amid growing concerns that clothing linked to forced labour in the region is being sold by Western brands and retailers.

Last year, US athletic wear provider Badger Sport dropped Chinese supplier Hetian Taida Apparel after some of its sportswear was traced to forced labour in Chinese internment camps. And US Customs and Border Protection (CBP) last month detained garments from the same manufacturer for allegedly being made with forced labour by prisoners.

Most recent reports suggest products produced with yarn from the Huafu Fashion Company, also based in Xinjiang, have been sold globally by companies such as Adidas, H&M and Esprit; along with gloves from the Yili Zhouwan Clothing Manufacturing Company.

A US government agency, the Congressional-Executive Commission on China, is also urging CBP to impose import restrictions on textiles or other goods made with forced labour in the Xinjiang Uyghur Autonomous Region (XUAR).

Global risk analytics company Verisk Maplecroft has also voiced its concerns that as China expands its Belt and Road initiative, Xinjiang will be a major springboard for Chinese economic activity into Central Asia. "The region's importance is one of the driving factors behind Beijing's tightening grip over Uyghur communities – so abuses faced by local communities are also likely to escalate," it says.