China’s textile and apparel sector is contracting further, with roughly 1,490 companies estimated to have dropped out of Beijing’s official industrial-enterprise data pool in the first half of 2026, according to industry data reviewed by The Epoch Times.
Figures cited by the Hong Kong General Chamber of Textiles show the number of “above-scale” textile firms fell by 389 year-on-year to 20,806 between January and May, while above-scale companies across the textile, clothing and apparel categories combined dropped by about 1,101 over the same period. China’s National Bureau of Statistics defines “above-scale” firms as those with annual revenue of at least 20 million yuan ($2.98 million). Exiting the category does not necessarily mean a company has failed; firms can also fall below the revenue threshold or undergo restructuring.
The slowdown is showing up on factory floors as well as in the data. A Zhejiang-based textile business owner told The Epoch Times that orders once spanning several months have given way to short, unfixed contracts of just days. Industry sources who spoke on condition of anonymity, citing fear of reprisal, described mounting pressure across the supply chain, from fiber producers to garment makers.
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Foreign-invested manufacturers are also retrenching. Chinese trade platform AMZ 123 reported on Sept. 9 that U.S.-invested Jiaxing Kanglong Textile Co. in Zhejiang has begun winding down operations and plans to halt production by the end of 2026, with some denim output shifting to Mexico. The company has not confirmed the report. Separately, Guangzhou Panyu Hengyi Garment Co. was declared bankrupt in May after a court accepted its liquidation case in January.
One source in the Yangtze Delta said multinational firms are increasingly relocating output to countries such as Vietnam or discontinuing product lines while retaining sales and technical functions in China, adding that conditions are likely to worsen further next year.
Official data present a more mixed picture. Above-scale textile companies posted revenue of 1.238 trillion yuan ($184.6 billion) from January to July, up 2.2% year-on-year, with profits rising 7.9% to 32.68 billion yuan ($4.87 billion), National Bureau of Statistics data released Aug. 27 showed. The apparel and clothing segment, however, posted revenue of 562.63 billion yuan ($84 billion), down 3% year-on-year, with profits of 16.81 billion yuan ($2.51 billion).
Some industry insiders have disputed the official profit figures, saying they do not reflect ground-level conditions in a sector they describe as in prolonged decline.