China Releases 2002 Economic Report, 2003 Forecast

China’s State Economic and Trade Commission (SETC) has released an overview of 2002 production and
operations of 45 state key enterprises in the textile sector. According to the report, the export
growth rate increased, and export delivery value rose 7.3 percent to 11.6 billion yuan ($1.4
billion), compared with an 8-percent decline in 2001. The gross industrial output value increased
by 9.4 percent to 55.16 billion yuan ($6.67 billion), up 1.3 percent over 2001. Main business
revenue rose by 7.2 percent to 62.76 billion yuan ($7.57 billion), down 0.8 percent from 2001. The
ratio of production to sales remained unchanged at 96.5 percent.

Looking toward 2003, the SETC expects textiles to maintain the momentum of 2002, but the
industry will face increased raw material costs and competition from its neighbors including
Vietnam, Thailand, Malaysia and India. As well, Mexico and Canada are expected to give China stiff
competition in the US market. A projected output in 2003 of 1.1 trillion yuan ($133 billion)
represents a 10-percent increase over 2002. Gross profits are projected at 31 billion yuan ($3.75
billion) and export volume at 62 billion yuan ($7.5 billion), both up 3 percent over 2002. Higher
prices for cotton and wool will negatively impact Chinas apparel industry. The country also trails
its competitors relative to installations of state-of-the-art machinery.

April 2003