--FILE--Female Chinese workers sew clothes to be exported to Europe and the United States at a garment factory in Huaibei city, east China's Anhui province, 27 March 2017.China's exports in yuan-denominated terms rose 14.8 percent year on year in the first quarter, while imports increased 31.1 percent, customs data showed Thursday (13 April 2017). Foreign trade volume reached 6.2 trillion yuan (about 902.47 billion U.S. dollars) in the first quarter, up 21.8 percent year on year.

SHANGHAI Compelled by the government, demands of their European clients — and also President Trump’s volatile trade-war talk — Chinese apparel manufacturers are rapidly cleaning up their acts.

“It’s a huge headache for everyone,” commented Ding Hongliang, president of eco-friendly fabric manufacturer Hemp Fortex Industries Ltd., referring to the stricter environmental regulations. “We are totally not against that, but they come so fast and they are so strict. No exceptions. They will shut you down first, and then check if you are qualified. They don’t give you a period to transition. We have a really powerful government.”

Friction between Beijing and the Trump administration has led many manufacturers to hedge their bets, often choosing to pursue more stable trade with European customers over American. This shift has pushed many Chinese factories to reexamine their manufacturing processes for European customers, where sustainability reigns supreme.

There’s also the home market to consider. As China continues to develop, and local consumers mature in their purchasing decisions, domestic demand for eco-friendly products is on the uptick. However, Chinese consumers remain segmented in their buying behavior, with customers on the industrialized eastern coast of the country a lot more advanced than their rural counterparts in the west of the country. What’s more, while these East Coast city dwellers are starting to reap the environmental benefits of the biggest polluters in the local area being shut down, some argue that change might be trickling down slower to the inland provinces.

Data released this month by the Global Carbon Project revealed that emissions are at an all-time high. According to the report, in 2017, carbon dioxide emissions were dominated by emissions from China, which accounted for 27 percent of the global total. The U.S. accounted for 15 percent of global emissions; the EU (including all 28 member states), 10 percent, and India, 7 percent. Last year, global emissions grew by 1.6 percent and this year they are expected to increase by 2.7 percent.

Between 2016 to 2017, the growth rate of carbon emissions for China was 1.7 percent, but this year the country’s carbon emissions growth rate is predicted to be 4.7 percent. Some industry experts have mused whether the rise this year was as a knee-jerk reaction to the slowing domestic economy, with some manufacturers or local authorities trying to jump-start business.

The central government is actively lowering carbon emissions, with the Ministry of Ecology and Environment this month stating that for 2017, the country’s carbon dioxide emissions per unit of gross domestic product declined by 46 percent compared to 2005. This has exceeded the government’s own target of reducing carbon intensity by 40 to 45 percent by 2020.

China is the world’s largest exporter of textiles and clothing. China’s textile exports last year accounted for 37.1 percent of the global market, which was up 5 percent from the previous year, according to the World Trade Statistical Review 2018, compiled by the World Trade Organization. In terms of clothing exports, China accounted for 34.9 percent of the global market last year. This figure has been in decline since 2014, as China increasingly outsources apparel manufacturing to less industrialized economies.

As the cost of labor in China has increased, and labor laws have been firmed up, the low-margin business of apparel manufacturing has become more expensive in a country that is becoming increasingly wealthy. This has led to consolidation in the market, with many smaller factories shutting down and some low-cost manufacturing moving overseas.

At the same time, the government has been on a mission to clean up the industry, shutting down many polluting plants in its wake. Beijing’s Made in China 2025 — a 10-year industrial development plan that was rolled out in 2015 with the aim to improve the manufacturing sector — has helped accelerate the country’s ascent of the value chain.

Investment and technical advancements in manufacturing have helped to modernize and reduce waste and pollution in the country. This perfect storm in the apparel manufacturing industry has led many Chinese manufacturers and apparel brands to focus more on sustainable processes and products.

“In terms of fabric and textile production, [China is] definitely moving toward more sustainable production. We now have the Textile Sustainable Manufacturing Coalition and the coalition is working on a Chemical Stewardship 2020 plan and will have a Chemical Information System similar to ZDHC [Zero Discharge of Hazardous Chemicals] Gateway [an online search engine]. More and more Chinese textile mills are Bluesign certified. We also have associations like Alliance for Waste Textiles Comprehensive Utilization, which I’m a member of, in promoting more usage of waste textiles,” said Vincent Djen, director of Cheng Kung Garment, which manufactures in multiple provinces around Mainland China.

Sustainability isn’t the only way in which Chinese manufacturers are looking to remain competitive in the face of stiff low-cost competition from manufacturers in Myanmar, Bangladesh and other Southeast Asian countries. Automation, new technologies and other advancements can help reduce manufacturing costs, but the uncertainty of China’s on-and-off trade war with the U.S. and unpredictable trade tariffs has forced many Chinese manufacturers to branch out, seeking new customers in Europe as well as domestically.

With those customers comes new demands on the industry, and it is possible that this newly focused export market is part of the reason why there is an increased push on sustainability. “[The industrial spinners] are pushed by their European clients to be more and more environment conscious: Europe is leading the movement as they will spend more for something that is truly ‘green’ oriented and they already warned that they would not buy any products in 2020 that would not be ‘clean,’” said SpinExpo fair organizer, Karine Van Tassel, who hosts biannual fairs for spinners and weavers in Shanghai, as well as fairs in New York and Paris.

Shanghai Skeco Textile specializes in eco-friendly plant and vegetable dying that minimizes pollution and water waste. The company manufactures fabric that is largely used in underwear, baby apparel and sleepwear, with its dye house based in Liaoning, in Northeast China, close to where the company harvests its cotton. It attracts buyers from big European clothing chains due to its eco-friendly production. Big business from leading European fashion brands is allowing this Chinese manufacturer the opportunity to continue its investment in and innovation of sustainable textile production.

“Currently there are many famous brands, including H&M, Zara and Marks and Spencer that have started to learn about this product. We are working with them to develop the product,” said Leon Van of Shanghai Skeco Textile.

There is much talk in the industry surrounding the government’s moves to curb pollution in the apparel manufacturing industry. The Chinese government is beginning to place more controls on the practices of local manufacturers and is shutting down polluting factories.

Benjamin Cavender, principal at China Market Research Group, believes that sustainable manufacturing is a relevant theme in China’s apparel market. “The government is working on reducing pollution in manufacturing and has spent the last two years or so raiding factories that have been breaking the law in terms of how they handle pollutants. If you look at the apparel industry, this has resulted in many of the fabric-dying and treatment operations closing or being moved offshore as that is one of the most resource-heavy, pollution-heavy sub industries in the world.”

Chen Dapeng, executive vice president of the China National Garment Association, is well versed in government policy in the apparel manufacturing industry. “The Chinese government attaches great importance to industrial upgrading and sustainable development. Among them, green manufacturing is an important development task and goal, which indicates that the Chinese government has fully considered the environmental impact and resource efficiency of economic development, and greatly promote the development of a green economy. In the past two years, the government and regulatory authorities have issued a series of new policies and regulations,” he said.

“The Chinese Government encourages green development through leveraging more market-oriented means such as green finance and environmental protection taxes, developing a more rigorous monitoring mechanism, and thus providing impetus and consolidate guarantee for green industrial upgrading,” said Chen.

Although many pollutant-heavy factories have been moved offshore, there is also the worry that some have been moved domestically, to less visible areas, exacerbating the urban-versus-rural, rich-versus-poor divide that has dogged the country since China’s reform and opening up, which began in 1978.

“It is more of a government policy push to go green rather than genuine public awareness. Authorities have tightened environmental regulations and started to close down factories that do not meet standards. Some low-cost manufacturing did move offshore, mostly garments, but most polluting heavy industries remain onshore. The environmentally friendly sentiment is mainly felt in the largest cities such as Beijing, Shanghai, and Shenzhen [in Eastern and Southeastern China]. People in less developed areas put more weight on jobs and income growth than sustainability,” said Dan Wang, an analyst at the Economist Intelligence Unit.

Chinese manufacturer Hemp Fortex has been producing organic, biodegradable fabrics since 1999. According to its president, when the company began, nobody in the industry knew or cared too much about organic cotton or recycled polyester, but in the past two years, the manufacturing of these materials in the country has exploded. “I would say 90 percent [of our product] is for export and 10 percent is for the domestic market, maybe some local brands,” Ding said. “By percentage, it is still really small. But for the total number of human people, it is quite a big number. Maybe already bigger than the European market! [In China], people start to care about organic food now. And the next step is that they are looking for healthier textiles, because that is something you wear all the time.”

Although the majority of sustainable fabric and apparel produced in China is earmarked for customers overseas, as Chinese consumers’ tastes mature, their disposable incomes rise, and the market continues to grow, there will only be an increasing demand for eco-friendly products, particularly apparel, observers predict.

Education in the country is improving, and children are taught from a young age about environmental protection. Chinese nationals are also a lot more aware of current affairs on a global scale and are able to learn about trends and mind-sets around the world, such as sustainability. Pollution levels in the country are often discussed, with Chinese people striving to live in greener, healthier cities.

According to a report released last year by the China Chain Store and Franchise Association, more than 70 percent of Chinese consumers understood the concept of sustainable consumption, characterized by the intention to buy products or services that have the least pollutants and do minimum harm to the environment. The report not only showed that the awareness of sustainable consumption amongst Chinese consumers is on the rise, but also that the domestic demand for these environmentally friendly products is increasing, with more than 70 percent of the survey’s respondents willing to pay 10 percent more for sustainable products or services over non-sustainable ones. The report listed safety and health as the top reasons Chinese consumers across 10 cities gave as the top reason for purchasing sustainable, or green, products and services.

“Consumer demand has effectively promoted production supply,” said Chen. “We have seen more and more manufacturing companies pay more attention to the development of environmentally friendly products, continually increase investment in equipment and processes in line with the requirement of environmental protection, and gradually be aware of enhancing the cultural value of eco-friendly in branding strategy.”

“The consumer is getting burned out on fast fashion and conspicuous consumption, and is becoming more focused on buying less but buying quality. This could mean sustainable fabric or it could mean natural dyes or something else. We are in the beginning of that trend, but it is definitely happening,” agreed Cavender.

Some local Chinese brands are following the environmentally conscious trend in the country by using more sustainably produced, eco-friendly materials. For example, Chinese down clothing company Bosideng is certified by the global nonprofit organization Responsible Down Standard. Chinese sportswear company Anta Sports has partnered with Teflon EcoElite to produce nonfluorinated waterproof materials. “Brands are becoming more sustainable because of the sustainability movement within the industry, the government embracing the U.N.’s Sustainable Development Goals, and global aspirations,” said Djen.

Ultimately, it could be grassroots organizations in the country, spearheaded by private individuals and companies rather than the government, which affect change in the industry through dialogue. “We are witnessing a lot of private initiatives, with very dedicated companies and people. For governments, it is more complicated as they need to please and compose with their citizens and cannot increase the charges that would be necessary for a better earth,” said Van Tassel.

One initiative, the Technology Innovation Strategic Alliance for Waste Textiles Comprehensive Utilization Industry, in which garment manufacturer Djen is involved, combines industry stakeholders and the government. The alliance holds conferences and connects stakeholders across the supply chain to foster awareness, communications and collaborations. “I have a better understanding and connection with people doing textile recycling now, so it helps me,” said Djen.

To be sure, China is nuanced and there is no one-size-fits-all model for a country of vast regional differences, with many consumer groups spread across the country’s tiered city system. Some are skeptical that the majority of Chinese consumers are actually demanding sustainable products, and thereby leading the market in that direction, rather than sustainable products being pushed domestically as a result of Chinese manufacturers trying to keep step with their international customers.

“Chinese middle-class consumers are more aware of the environmental damages linked with apparel making, but it is not strong enough to alter their buying behavior. The majority of consumers in China remain price-sensitive. For high-end apparel, consumers mostly focus on the brand and appearances, rather than their environmental implications,” said EUI analyst Wang.

Longtime hemp textile manufacturer Ding disagrees. “There are more people in China that start to get to know, to understand, and to care about the environment and care about sustainable products,” he argued. “The market is not something controlled by the manufacturer. It must come from the market. Maybe you know the manufacturer can do something to push and promote their products, but I don’t think they could decide the market.”

SpinExpo organizer Van Tassel also believes there is a divide in the country when it comes to sustainability in the industry. “The more industrial spinners in Zhejiang or Jiangsu [in Eastern China] do care about the environment, while the converters from the Guangdong area [Southeastern China] just care about their cost prices and grabbing the business.”