Xin­jiang cot­ton at cross­roads of new Silk Road

1 mil­lion tex­tile jobs to be cre­ated by 2023 in the au­ton­o­mous re­gion

China Daily (Canada) - - XINJIANG - By REUTERS and CHI­NADAILY in Aksu, Xin­jiang

The Youn­gor cot­ton spin­ning fac­tory is one of the big­gest em­ploy­ers in Aksu, an agri­cul­tural town on the edge of the Tak­la­makan desert in the Xin­jiang Uygur au­ton­o­mous re­gion.

Youn­gor, one ofChina’s largest shirt­mak­ers, opened the plant in 2011 to be closer to the main cot­ton-grow­ing re­gion in the Xin­jiang re­gion. Soon it will be joined by oth­ers: China wants to cre­ate 1 mil­lion tex­tile jobs in Xin­jiang by 2023.

Ac­cord­ing to the re­gional govern­ment’s 13th Five-Year Plan (2016-2020), Xin­jiang will be­come a key hub for tex­tile pro­duc­tion. It will also ex­tend the in­dus­try chain from cot­ton spin­ning to mak­ing gar­ments. By 2020, Xin­jiang is ex­pected to pro­duce about 500 mil­lion gar­ments an­nu­ally and cre­ate­morethan 600,000 jobs.

Aksu, in south­ern Xin­jiang, will be­come one of three tex­tile cities in the re­gion, the plan for 2016-2010 said. It also will en­cour­age res­i­dents to start their own tex­tile work­shops to make tra­di­tional eth­nic cloth­ing and car­pets.

Xin­jiang fits into Bei­jing’s larger vi­sion of shift­ing la­bor­in­ten­sive in­dus­tries such as tex­tiles out of the Pearl River Delta and into the in­te­rior. China is putting less value on be­ing “the world’s work­shop” amid la­bor short­ages and com­pet­i­tive pres­sures from South­east Asia.

The tex­tile hub is also a key ini­tia­tive in Pres­i­dent Xi Jin­ping’s Belt and Road Ini­tia­tive, which seeks to link de­vel­op­ment from western China to Cen­tral Asia and on­ward to Europe.

“We must pro­mote em­ploy­ment as a per­ma­nent cure to main­tain so­cial sta­bil­ity and achieve long-last­ing peace, and par­tic­u­larly solve the un­em­ploy­ment­prob­lem­for­peo­plein south­ern Xin­jiang,” a 2014 of­fi­cial doc­u­ment stated, out­lin­ing a mas­sive ex­pan­sion of Xin­jiang’s tex­tile in­dus­try.

Xin­jiang, which is home to more than half ofChina’sMus­lims, has al­ways been China’s front line on religious ex­trem­ism that is blamed for ter­ror­ist at­tacks in the re­gion in re­cent years. The re­gional govern­ment be­lieves em­ploy­ment and bet­ter education can help young peo­ple stay away from such ex­trem­ism.

Al­most all of the 520 em­ploy­ees at the Youn­gor fac­tory are from the Uygur eth­nic group. The av­er­age fac­tory floor salary is around 3,000 yuan ($456) a month, and comes with food and lodg­ing. That com­pares to roughly 4,000 yuan for tex­tile work­ers in the south­ern China fac­tory belt.

“There are still a lot of peo­ple to come out of (Xin­jiang’s) coun­try­side,” said Xu Zhiwu, gen­eral man­ager at Youn­gor’s Aksu fac­tory, re­fer­ring to govern­ment data that show 2.6 mil­lion ru­ral res­i­dents sought work in Xin­jiang’s cities in 2014.

Xin­jiang Youn­gor Cot­ton Spin­ning, a unit of Youn­gor Group, is plan­ning to ex­pand its fac­tory, built among ap­ple or­chards on Aksu’s out­skirts, Xu said.

Yarn maker Huafu Top DyedMe­lange Yarn is al­ready at work on a 5 bil­lion yuan plant out­side Aksu. And Tex­hong Tex­tile Group, one of China’s top spin­ners, is tar­get­ing a 1-mil­lion spin­dle pro­ject in the re­gion.

“The scale of the pro­ject has to be big to ask for more fa­vor­able pol­icy sup­port­from­mu­nic­i­pal gov­ern­ments,” Tex­hong re­ported in a stock ex­change state­ment, re­fer­ring to sub­si­dies Bei­jing of­fers to lure firms to the re­gion.

More than 60 per­cent of China’s cot­ton crop is grown in Xin­jiang. It’s a ma­jor ad­van­tage for com­pa­nies that process the fiber into cot­ton thread to be close to sup­plies. The au­to­mated spin­ning fac­to­ries also ben­e­fit from elec­tric­ity prices around half those in coastal provinces.

Spin­ning needs rel­a­tively few work­ers. Cre­at­ing 1 mil­lion tex­tile jobs will re­quire a build-out of the en­tire in­dus­try chain, from dye­ing to weav­ing to gar­ment pro­duc­tion. And that poses a far greater chal­lenge than at­tract­ing more spin­ners.

Dye­ing, bleach­ing and wash­ing of fab­ric would de­mand sub­stan­tial sup­plies of wa­ter in the arid re­gion. Much of Xin­jiang, in­clud­ing Aksu, is clas­si­fied as “high risk” for wa­ter stress by the non­profit World Re­sources In­sti­tute. The in­sti­tute has des­ig­nated Shi­hezi and Kuerle, two cities also tar­geted for ma­jor tex­tile ex­pan­sion, as “ex­tremely high risk”.

Aksu is con­sult­ing with tex­tile com­pa­nies on plans to build a 50,000-met­ric ton waste­water treat­ment fa­cil­ity to han­dle dis­charges from fu­ture dye­ing op­er­a­tions, said Youn­gor’s Xu, who has at­tended re­cent govern­ment meet­ings on the is­sue.

A sim­i­lar fa­cil­ity is also un­der dis­cus­sion for Shi­hezi, near Urumqi, but some com­pa­nies are wary of pro­ceed­ing with dye­ing in the area.

“We are not sure whether the ca­pac­ity of the fa­cil­ity could meet all the de­mand and pro­tect the en­vi­ron­ment from dam­age,” said Zhao Yang, gen­eral man­ager of three Xin­jiang spin­ning fac­to­ries owned by shirt maker Esquel in Hong Kong.

“Com­pared with Guang­dong, where our fab­ric mill sites are, Xin­jiang’s wa­ter is very scarce,” he said.

Xin­jiang’s lo­ca­tion, more than 4,000 kilo­me­ters from Shang­hai in the east or Guangzhou to the south, is also a hur­dle for com­pa­nies rush­ing to meet tight dead­lines for over­seas clients, Xu said.

Like Youn­gor, Esquel, maker of men’s shirts for brands such as La­coste, Tommy Hil­figer and Ralph Lau­ren, has no plans for down­stream op­er­a­tions in Xin­jiang, Zhao said.

The pres­i­dent’s Belt and Road Ini­tia­tive, an­nounced in late 2013, aims to re­store China’s old mar­itime and over­land trade routes. Xi has said he hopes to in­crease trade with more than 40 coun­tries to $2.5 tril­lion within a decade.

Xin­jiang is at the heart of the newsilk road into Cen­tralAsia. China is mak­ing huge in­vest­ments in newrail­ways run­ning from east­ern China through Xin­jiang to Cen­tralAsi­aan­don into Europe.

That should even­tu­ally cut trans­port times to some mar­kets by weeks, giv­ing Xin­jiang com­pa­nies an edge over man­u­fac­tur­ers re­ly­ing on ocean freight.

By sub­si­diz­ing trans­port, staff train­ing and in­sur­ance, and of­fer­ing gen­er­ous sup­port for fi­nanc­ing, Bei­jing’s ef­forts to build a tex­tile hub in Xin­jiang could counter the tide of tex­tiles in­vest­ment­pouringout of the coun­try.

But take away the sub­si­dies, and Xin­jiang looks a lot less ap­peal­ing. Freight costs on the first rail lines run­ning west are still 50 per­cent higher than ship­ping costs.

Add a min­i­mum wage al­ready about 50 per­cent higher than that of Viet­nam, one of the world’s fastest-grow­ing tex­tile hubs, and costs in the re­gion be­gin to look non­com­pet­i­tive.

High costs were be­hind a 36 per­cent drop in Xin­jiang’s tex­tile ex­ports in the first eight months of last year, ac­cord­ing toXin­jiang’s cus­toms bureau.

Bei­jing’s sub­si­dies are sim­ply not enough to put much fo­cus on ex­ports, saidHua Jing­dong, board sec­re­tary at Bros East­ern, an­other cot­ton spin­ner.

“Our strat­egy is to make our cur­rent do­mes­tic pro­duc­tion sta­ble, and any ad­di­tional ca­pac­ity to be over­seas,” Hua said

Tex­hong has re­cently scaled back its Xin­jiang pro­ject, from an ini­tial 3 mil­lion spin­dles, to just 1 mil­lion. Com­pany of­fi­cials could not be reached for com­ment on the change.


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