BEIJING: China’s textile exporters suffer close to $1 billion in lost profits for every 1 percent increase in the value of the yuan, a leading textile industry association said on Friday.
Beijing has often said that one reason it cannot allow the currency to appreciate too quickly is because of the harm it could do to the margin-thin sector, which employs close to 20 million people.
Sun Huaibin, spokesman for the China National Textile and Apparel Council, said that for every percent rise in the yuan against the dollar, China’s textile firms saw their profits go down by 7.2 billion yuan ($930 million).
“The pressure that a strengthening yuan puts on exports and profitability, as well as a worsening export environment resulting from trade disputes, will continue to impact the industry’s performance in 2007,” the council said in a statement distributed at a news conference.
The yuan, which was trading at 7.7432 against the dollar on Friday, has strengthened 4.7 percent since Beijing revalued it by 2.1 percent and decoupled it from a dollar peg in July 2005.
Analysts polled by Reuters in February expected the currency to reach 7.40 to the dollar by the end of this year, meaning a further rise of 4 percent by then.
Still, the organisation estimated that profits for firms with at least 5 million yuan in sales would grow from about 88 billion yuan in 2006 to over 100 billion yuan this year. Customs figures show that China exported $144 billion worth of textiles and apparel products last year, about 25 percent more than in 2005.
Analysts say that logistical advantages and a relatively skilled workforce mean Chinese textile makers will remain competitive even as the yuan continues to strengthen.
