The textile industry saw 400,000 workers made redundant in the first half of the year, but falling domestic and export prices mean it has only managed to cut losses by about 4 per cent of the target for the year.
Beijing has chosen the textile industry as a model for cutting back the state sector, with the aim of reducing the chronic overcapacity that plagues most industries.
In the first half of the year, 2.8 million cotton spindles were destroyed in addition to the lay-offs, the People's Daily reported yesterday. But the industry cut its losses by only 100 million yuan, against a goal of cutting losses by three billion yuan for the year. This was because exports of textiles fell by nearly two percentage points, with prices of cotton textile exports down 10 to 20 per cent and prices of textiles in the domestic market down about 20 per cent.
The Finance Ministry has allocated 474 million yuan (about HK$441.15 million) as a subsidy towards the removal of surplus spindles by 194 textile factories.
The textile industry has been hit by a slowdown in domestic demand, with consumer retail sales in the first five months rising by only 6.9 per cent year on year, while the sector is also battling in foreign markets against goods from Asian countries whose currencies have been devalued.
