What Is "Double Cycle"? What Is The Impact On The Textile Industry?

Since May this year, the new development pattern of "double cycle" has been mentioned many times.

Standing at the historical juncture of the world's unprecedented changes in a century, looking forward to the "14th five year plan", building a complete domestic demand system, and gradually forming a new development pattern with the domestic big cycle as the main body and the domestic and international dual circulation promoting each other has become the key content of our planning for the next stage of China's economy.

How to correctly understand the hot word "double circulation"? How to solve the problem with the domestic big cycle as the main body?

01 what is "double cycle"?

"Double circulation" is a very important hot word recently.

It mainly refers to the gradual formation of a new development pattern with the domestic big cycle as the main body and the domestic and international double circulation promoting each other.

On July 30, 2020, the Political Bureau meeting of the CPC Central Committee stressed the policy thinking of "double cycle". The meeting pointed out that "the current economic situation is still complex and severe, with great uncertainty. Many of the problems we have encountered are medium and long-term. We must recognize them from the perspective of protracted war, accelerate the formation of a new development pattern with the domestic big cycle as the main body and the domestic and international dual circulation promoting each other, and establish a medium and long-term coordination mechanism for epidemic prevention and control and economic and social development." The meeting further clarified that the development pattern of "double cycle" is not a short-term consideration, but "understanding from the perspective of protracted war". This also means that the "double cycle" will become the overall guiding ideology of medium and long-term economic policies, and will have an important impact on the economic work deployment during the "14th five year plan" period.

Source: financial magazine

However, the "double cycle" does not mean that there is no external or internal. Taking the domestic big cycle as the main body means to make efforts to break through all links of domestic production, distribution, circulation and consumption, give full play to China's super large-scale market advantages, and take meeting domestic demand as the starting point and foothold of economic development.

The domestic and international dual circulation promotes each other, emphasizing the domestic economic cycle as the main, and is not "self closed". The purpose of this is to bring the potential of domestic demand into full play, make the domestic market and the international market better connected, make use of the two markets and resources at home and abroad, and realize more robust and sustainable development.

Why does "double cycle" become a new proposition?

The proposal of "double cycle" new development pattern is not only the inevitable result of the change of external environment, but also the only way for the transformation of domestic development stage.

In order to enhance China's domestic and external economic development, we must take the initiative to develop China's external and domestic advantages by taking part in the process of "opening up and opening up" New development pattern of mutual promotion ".

With the outbreak of new crown pneumonia, the world economy has suffered a severe setback and the global demand market has shrunk. The international situation presents an unprecedented complex pattern. According to the world economic outlook report recently released by the International Monetary Fund, Developed economies and emerging economies will shrink by 3.9% in 2020.

At present, China's economy has become a big country with obvious spillover effect on the world economy. In such an external context, simply relying on participation in the international economic cycle is not enough to continue to support long-term sustainable economic development.

How to solve the problem with the domestic big cycle as the main body?

As the second largest economy in the world, China can release great potential with the major domestic circulation as the main body.

China has the world's most complete and largest industrial system, strong production capacity and perfect supporting capacity. It has more than 100 million market subjects, more than 170 million talents with higher education or various professional skills, and a super large domestic demand market formed by 1.4 billion people, including more than 400 million middle-income groups. China is now in the process of new industrialization, informatization and urbanization Great demand for investment and rapid development of Agriculture This is the advantage of our national conditions.

On the whole, in the first half of the year, China gradually overcame various unfavorable factors, and the momentum of steady economic recovery continued to consolidate. The National Bureau of Statistics announced on July 16 that China's economy grew by 3.2% year-on-year in the second quarter. The latest data from the General Administration of Customs showed that textile and clothing exports grew for four consecutive months from April to July 。 With the gradual alleviation of the global epidemic situation, the demand for epidemic prevention materials decreased, and the growth rate of textile export in July slowed down compared with the previous period. The purchase demand for clothing in the main markets rebounded, and the clothing export tended to improve, with a significantly narrower decline compared with the previous period. From January to May of 2020, China's industrial textiles industry exports a total of 34.29 billion U.S. dollars of various commodities, with a year-on-year increase of 202.62%. Among the main export products, the export value of masks reached 22.56 billion US dollars, and that of nonwoven protective clothing was 2.06 billion US dollars, accounting for 65.78% and 6% of the total export value of the industry respectively.

The positive changes in these data reflect the strong resilience and deep potential of China's economy. The next step is to continue to take meeting domestic demand as the starting point and foothold of development, accelerate the construction of a complete domestic demand system, firmly implement the strategy of expanding domestic demand, and form a lasting and strong driving force for economic growth.

04 under the current situation, how to break through the "double cycle"?

"The most urgent task of the domestic big cycle is to expand domestic demand, stabilize and optimize the industrial chain." Yan Yilong, vice president of national conditions Research Institute of Tsinghua University and associate professor of School of public management, believes that the first thing is to actively expand internal demand, expand effective investment demand, tap potential consumption demand, and promote the big cycle of supply and demand. Secondly, we should optimize and stabilize our industrial chain, ensure that our advantages in the whole industrial chain are not reduced, and firmly grasp the opportunity of the fourth industrial revolution.

　　 How to cycle? The four links of the domestic big cycle are: production, distribution, circulation and consumption. Internal circulation is to promote the elements and resources in the four processes to reduce friction, stimulate vitality, improve efficiency, and ultimately pursue the maximization of benefits.

　　 First of all, the supply chain stability and competitiveness can be realized by supplementing the short plate and forging the long plate in the production link. As a big manufacturing country, China has a competitive advantage in the "production side". However, there is also the defect that the proportion of low added value is too high. Therefore, the "internal circulation" in the production link will focus on "forging long plates and making up for the weak ones", so it is necessary to give full play to the cost advantage and further reduce the external dependence of low value-added products. Grasp the good opportunity of domestic substitution, layout all links of the industrial chain, and improve the stability of the system.

　　 Second, improve the efficiency of circulation. The development mode of "Circulation" must be established on the basis of "circulation system". The goal of circulation "internal circulation" is efficient interconnection, the main form is to improve efficiency and reduce costs, such as the development of high-speed rail, the construction of online and offline supply chain ecosystem, the reduction of high-speed rail fares, express freight and so on.

05 "double cycle" promotes opening up to a new stage

Of course, taking the domestic big cycle as the main body does not mean that China is beginning to become closed. The Chinese don't want to experience the pain of "shutting down the country" and "falling behind will be beaten".

In today's world, although economic globalization is interfered by protectionism and unilateralism in some countries, it is a long-term trend for all countries to divide their work and cooperate for mutual benefit and win-win results.

　 Expanding domestic demand does not mean giving up foreign trade, nor does forming a large domestic market mean giving up international competition. For China, expanding domestic demand and opening up are not contradictory. The smoother the domestic circulation, the more favorable it is to build a new pattern of opening up and to form new advantages in participating in international cooperation and competition.

Since the outbreak of the epidemic, China has not slowed down the pace of opening up while practicing "internal skills". In May, "opinions on financial support for the construction of Guangdong, Hong Kong and Macao Bay Area" was officially issued. In June, "overall plan for the construction of Hainan free trade port" was officially issued. The negative list of foreign investment access in 2020 edition was further reduced. This year, restrictions on the ratio of foreign shares in futures, funds and securities companies have been or will be lifted step by step. It also points out that "in the mid May, the implementation of the new market system should be more active, and the international market system should be more open in a wider range.". It also elaborates on the following four aspects: the belt and road initiative, the pilot free trade zone and the free trade port, the high-level opening policy guarantee mechanism, and the participation in the reform of the global governance system. At the same time, China is also actively promoting the negotiation of the bilateral investment agreement between China and the EU, as well as the formal signing of the RCEP agreement.

It can be said that under the new situation, the "double cycle" is to coordinate the overall situation at home and abroad, promote the new strategic layout of two resources, two production, two chains and two markets, and push China's opening up to the outside world into a new stage.

There is no doubt that China's development cannot be separated from the world, and the development of the world also needs China. In the future, China's door will only open wider and wider, and share its huge market opportunities with the world.

06 enhance the value chain level of textile industry

Bright prospects for domestic clothing brands

　　 In the field of textile industry, it is necessary to improve the value chain level of textile industry, and to strengthen the leading position of superior industries, and finally realize the acceleration of domestic substitution. First, it is necessary to support enterprises to implement technological transformation and upgrading. For industries or industrial chain links with advantages, they should further strengthen their advantages and accelerate the transformation of intelligence and digitization. The second is to encourage enterprises to enhance the level of value chain and establish brand value. Finally, through the above two items, the technology and brand power can be improved to attract high-quality external demand return, promote domestic substitution and form a positive effect on external circulation.

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China's clothing industry has a large space for development, and its concentration is expected to continue to increase in the future. China's clothing industry belongs to the mature industry. According to the data of Bloomberg, the retail sales of China's clothing industry in 2019 will be 2.62 trillion yuan, with a year-on-year growth of 5.30%, and the compound growth rate in recent five years is 5.93%. Compared with developed countries, China's clothing consumption per capita in 2019 is 36.6, lower than the consumption level of Britain and the United States, and there is still room for growth in the future.

The competition pattern of China's clothing industry is still relatively scattered. In 2019, the market share of Ling Zhi group, China's No.1 clothing brand company, is only 1.5%, while gap and fast retailing, which are the first clothing brand companies in the United States and Japan, account for 4.3% and 15.2% respectively. Compared with the market share of clothing brands in developed countries, the market share of major domestic clothing brands is expected to continue to increase.

　　 Benefited from the promotion of competitiveness and the rise of national trend, Chinese clothing brands have a bright future. The gap between domestic brands and foreign brands has narrowed, and overseas brands have withdrawn from the Chinese market. Domestic brands are improving in brand, product, design, channel, supply chain and retail management. At the same time, with the rising trend of the national tide, it has achieved rapid development. Some domestic brands began to compete for the original share of international brands, such as mjstyle, ur, China Li Ning, bosden, taipingniao, etc.

Among the world's top five economies, only the top 10 brands in China's clothing market have a domestic quantity of less than 50%. In 2019, the top 10 brands in China's clothing market are Adidas, Nike, Anta, UNIQLO, Hailan home, skykey, Li Ning, FILA, balabalabala and Tebu. Among them, there are 5 complete domestic brands, accounting for 50%, which are Anta, Hailan home, Li Ning, Balabala and Tebu. Among the top 10 clothing brands in the United States, 8 are domestic brands; 8 are in Japan; and 6 are in Germany (7 in Germanic system). Top 10 domestic brands of sportswear and sportswear in other countries, Although in recent years, Chinese sports brands are hot again, but they are still in the initial stage, consumers in the middle and high-end market still prefer Nike ADI. There is still a gap between domestic sports brands and international brands in terms of concept building and marketing; in addition, 7 sports brands account for the top 10 brands, which shows that domestic leisure fashion brands have development potential and have a bright future.