Analysis Of China Textile And Apparel Trade Development And The Influence Of The TPP Agreement

The US-led12-nation talks "Trans-Pacific Strategic Economic PartnershipAgreement" TPP will be built into the largest free trade area in the world, andChina’s textile and apparel exports will be affected due to the "zero-tariff" highstandards. This paper aims to study the competition,complementarity and developingtrends of textiles and apparel between China and Vietnam, from the whole to specificcategories, and quantifies the impact of TPP on the specific categories of China’stextile and apparel industry.Base on the review of the core theory of regional economic integration in thecore of the international industrial transfer and industrial and international industrialtransfer and upgrading, this paper has3major steps:(1). Compare the trade andproduction of China and Vietnam;(2). Focus on the US market, by calculating thetextile and apparel exports similarity index ESI between these two countries to studythe game between the them in the US textile and apparel market;(3). Develop anempirical model based on the elasticity of substitution to quantify the impact of TPPon the specific categories of China’s textile and apparel industry.ESI study showed the high similarity of products between China and Vietnamespecially in apparel categories while the development of the textile is heading toheterogeneous directions. ESI study also found the nature of competition in the USmarket is focus on five major apparel categories from841to845. Furthermore, theempirical model based on substitution elasticity found that, essentially, the mostaffected categories will be two major apparel categories841and845, which mightexperience the biggest drop in decline rate and absolute value respectively.Therefore, if the TPP came into effect, based on the trade diversion effect, thethe share of China’s apparel exports to the US will be transferred to Vietnam, whilethe share of China’s textile exports to Vietnam will be transferred to the UnitedStates. However, despite the fierce competition, TPP will not have a devastating impacton the China’s textile and apparel exports because of the huge difference in the tradevolume and China’s fragmentation of target market and diversification of exportstructure. In contrast, TPP will promote China’s international industrial transfer andupgrading to a certain extent, which means related companies need to be wellprepared for that and the two sectors of841and845might undergo industrialtransfer and upgrading first.