The ‘Belt and Road’ Initiative: Opportunities in the Textile Sector
In 2013, Chinese president Xi Jinping proposed the ‘Belt and Road’ initiative.
Taking inspiration from the ancient Silk Road running from China to Europe, this scheme seeks to utilize the Silk Road Economic Belt and 21st-century Maritime Silk Road to foster connectivity and cooperation between China and the rest of Eurasia. By linking East Asia’s vibrant economic circle with the developed economies of Europe, countries along the routes will be given the opportunity to benefit from the initiative’s huge potential for economic growth.
‘Belt and Road’ Initiative
‘Belt and Road’ brings together the Silk Road Economic Belt and 21st-century Maritime Silk Road into one global trade and development initiative. The Silk Road Economic Belt focuses on bringing together China, Central Asia, Russia and Europe (the Baltic); linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and West Asia; and connecting China with Southeast Asia, South Asia and the Indian Ocean. The 21st-century Maritime Silk Road is designed to go from China's coast to Europe through the South China Sea and the Indian Ocean in one route, and from China's coast through the South China Sea to the South Pacific in the other.1
Currently, 71 countries are involved in the ‘Belt and Road’ initiative, including:
- Asia-Oceania Region: Mongolia, Korea, New Zealand, Timor-Leste, Singapore, Malaysia, Thailand, Indonesia, Brunei, Cambodia, Myanmar, Laos, Vietnam
- Central Asia Region: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan
- West Asia Region: Georgia, Azerbaijan, Armenia, Iran, Iraq, Turkey, Syria, Jordan, Lebanon, Israel, Palestine, Saudi Arabia, Yemen, Oman, United Arab Emirates, Qatar, Kuwait, Bahrain
- South Asia Region: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka
- East Europe Region: Russia, Ukraine, Belarus, Moldova, Poland, Lithuania, Estonia, Latvia, Czech, Slovakia, Hungary, Slovenia, Croatia, Bosnia and Herzegovina, Montenegro, Serbia, Albania, Romania, Bulgaria, Macedonia
- Africa and Latin America Region: South Africa, Morocco, Ethiopia, Madagascar, Panama, Egypt2
Taking inspiration for its name and purpose from the Silk Road that traded Chinese silk to Europe, it is not surprising the new routes will also have a major impact on Chinese and global textile trading.
China is already investing in some of the biggest projects associated with the initiative, such as the China-Pakistan Economic Corridor, a port city in Sri Lanka and Indonesia’s high-speed railway – all designed to help facilitate international trade. In addition, China Civil Engineering Construction Corporation (CCECC) is currently building a textile plant in Dire Dawa, Ethiopia’s eastern city, with investment of USD 220 million. This will significantly improve Ethiopia's textile industry and Sino-Ethiopia corporation.
In 2017, the Chinese province of Xinjiang, the first stop along the Belt, invested around CNY 450 billion (USD 66 billion) in infrastructure, projected to increase by 50 percent year-on-year. In the same year, 700 freight trains left the province’s capital, Urumqi, heading for Europe. That number is expected to double in 2018, making Xinjiang a hub for the ‘Belt and Road’ initiative.
Chinese imports and exports are growing rapidly. In 2017, the import and export volume between China and ‘Belt and Road’ countries reached USD 1,440 billion, up 13.4% from 2016 and accounting for 36.2% of China’s total import and export trade. Chinese exports to ‘Belt and Road’ countries now account for 34.1% of its total exports, growing annually by 8.5% and worth around USD 774 billion. Imports are now worth USD 666 billion, rising annually by 19.8% and now accounting for 39.0% of China’s total imports. This was the first time in five years imports outgrew exports.2
Textiles continue to be important part of Chinese trade and the ‘Belt and Road’ initiative is being used to enhance cooperation and growth in the sector. For example, in the apparel and clothing accessories market (excluding knitted and crochet), three of China’s main exporters are ‘Belt and Road’ countries – Korea 22%, Russian 25%, and Kyrgyzstan 15%.3
Textile manufacturers are also taking advantage of other opportunities created by the initiative. As wage levels rise in China, companies have begun to move operations to lower-cost regions such as South and Southeast Asia. International Trade Centre (ITC) data also shows that the top exporters of textile raw materials from China are also South Asian countries (e.g. India, Bangladesh, Pakistan) or Southeast Asian countries (e.g. Philippines, Vietnam, Cambodia) along the routes.3
China’s First Import Expo
In 2010, China became the world’s second-biggest economy, bringing improvements to living standards and increased demands for high-end imported products. To help satiate this demand, China will be holding the first China International Import Expo (CIIE) in Shanghai from November 5 to 10, 2018. Over 2,800 companies from 130 territories, including over 200 businesses on the Fortune Global 500 list, and more than 160,000 purchasers from over 80,000 companies, will be attending the event.4
CIIE is a demonstration of the country’s willingness to ‘open-up’ to the world and is seen as a significant move by the government in its promotion of trade liberalization and economic globalization. It will bring over a million commodities and services to China’s transforming consumer market. Over 50 countries along the “Belt and Road” have confirmed participation in the event, which is expected to act as a catalyst to further growth. Furthermore, all G20 members, accounting for around 85% of the gross world product (GWP) and 80% of world trade, will also be attending the event.
‘Belt and Road’ Standard Connectivity
On January 11, 2018, the Office of the Leading Group for the Belt and Road Initiative issued the “Action Plan on Belt and Road Standard Connectivity (2018-2020).5 It defines goals for the next three years, including the development of standards with open and inclusive features to facilitate exchange and mutual evaluation, interconnection and result sharing, and greater harmony between Chinese standards and foreign/international standards – standardization is to play a fundamental and strategic role in promoting the ‘Belt and Road’ initiative.
The action plan focuses on the key channels of interconnection and major projects, deploys nine key tasks, plans national standardization resources and arranges nine special actions. Open standards and increased harmonization are to be used to:
- Promote the interconnection of policies, facilities, trade, funds and public perception
- Facilitate technical communication and cooperation along the ‘Belt and Road’ through globalization of Chinese standards
- Improve compatibility for standard’s systems in ‘Belt and Road’ countries through mutual recognition
- Enhance Chinese standard's brand through contribution to the construction of the ‘Belt and Road’
SGS Softlines state-of-the-art laboratories are situated throughout the world, including in ‘Belt and Road’ countries, such as India, Bangladesh, Vietnam, Turkey, Saudi Arabia, Russia and Poland. SGS offers high capacity, quick turnaround times, and expertise to help textile companies take advantages of the opportunities afforded by the ‘Belt and Road’ initiative.
For further information, please contact:
SGS Global Softlines
SGS-CSTC Standards Technical Services Co., Ltd.
t: +86 21 61402666 2422
Sources1 Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road
2 Big Data Report on Trade Cooperation under the Belt and Road Initiative
3 Yearly Trade by Commodity Statistics 2001-2017, International Trade Centre(ITC)
4 Over 160,000 purchasers register for China's first import expo
5 Action Plan on Belt and Road Standard Connectivity (2018-20)