China produces over half of the world’s fibre output and accounts for more than 30 per cent of global apparel exports, valued at $294 billion, positioning it as a pivotal force in lowering fashion’s carbon footprint. However, while national ‘dual carbon’ targets, green finance policies, and clean energy progress have created a favourable backdrop, decarbonisation efforts remain uneven in practice, Aii and Development Finance International (DFI) said in their latest report, ‘Landscape and Opportunities for the Decarbonization of China’s Textile and Apparel Manufacturing Sector’.

Aii identified around 44,000 ‘scaled enterprises’—companies with annual turnover above CN¥20 million (~$2.85 million)—as the segment best positioned to act. These manufacturers, many clustered in industrial parks, have the operational scale, emissions impact, and data readiness to drive near-term reductions, but face persistent barriers beyond financing.

China’s textile and apparel sector needs at least $40.8 billion to cut emissions by 50 per cent by 2030, as per Aii.
Despite supportive ‘dual carbon’ policies, decarbonisation remains uneven.
Around 44,000 scaled enterprises are best placed to act but face technical and financing gaps.
Industrial parks, green finance, and coordinated action are seen as key to scaling emissions reductions.

Manufacturers report gaps in technical know-how, planning tools, and localised support, alongside difficulty interpreting evolving brand and regulatory requirements. Although domestic green finance is widely available, aligning standard loan and equity models with diverse factory needs remains a challenge.

International financial institutions are playing a growing role, with $4.3 billion across eight active green credit lines confirmed as of 2024. However, uptake is often limited as local loans priced at 3-4 per cent are preferred over IFI-backed financing, which ranges from 3-7 per cent and can involve stricter conditions.

Industrial parks are highlighted as a strategic platform for scaling action. More than 11,000 textile enterprises operate across over 1,300 parks, offering shared infrastructure and governance models that can lower transition costs. China’s nationwide zero-carbon industrial park initiative, launched in 2025, further strengthens this pathway.

The report also pointed to emerging best practices, including digital tools, factory-level diagnostics, and bundled solutions piloted by local governments, brands, and technical partners. Aii’s Climate Solutions Portfolio identified priority interventions such as energy efficiency upgrades, renewable energy adoption, chemical innovation, and thermal energy recovery.

Aii calls for stronger collaboration across brands, manufacturers, financial institutions, and local authorities. Key recommendations include diversifying financing mechanisms, improving alignment between brand expectations and supplier capabilities, embedding low-carbon planning into core business strategy, expanding local technical assistance, and strengthening data-sharing platforms.

The report added that coordinated action and aggregated demand will be critical to translating strong climate ambition into tangible emissions reductions across China’s textile and apparel value chain.

Fibre2Fashion News Desk (SG)