China’s Silk Industry in H1 2026: A Comprehensive Business Intelligence Report

For anyone sourcing silk products from China or evaluating potential partners in the cocoon-and-silk value chain, the second-quarter survey released by the China Silk Association offers the clearest recent window into the industry’s health. Covering 93 enterprises across the main production provinces and spanning cocoon rearing, reeling, weaving, dyeing, apparel, home textiles and trade, the data paints a picture of an industry that has finally stepped back into expansion territory after a prolonged soft patch—yet one that remains uneven and still carries meaningful risks.

1 The Big Picture: Industry Returns to Expansion

After several consecutive quarters of subdued readings, the return above 50 is meaningful. It does not mean the industry is booming; it means the balance of firms reporting improvement has tipped just far enough to indicate net expansion. Most enterprises describe conditions as “stable” rather than “strong,” and the gap between better-performing and struggling firms remains wide.

The survey sample itself is instructive. Roughly 35–38 % of respondents were engaged in cocoon and reeling activities, another quarter in weaving, and smaller shares in home textiles, apparel, dyeing and trading. Geographically, Chongqing, Jiangsu, Zhejiang, Guangxi and Anhui accounted for the bulk of responses—precisely the traditional heartland of China’s silk production. Medium-sized firms (annual revenue between RMB 20 million and 400 million) made up more than half the sample, giving the results a solid mid-market grounding.

2 Production Snapshot: Stability Dominates

On the production side, the dominant story is flat output rather than sharp growth or contraction. Averaging across product categories, about 54.5 % of enterprises reported volumes essentially unchanged from the same period a year earlier. Roughly 21.6 % achieved growth of around 10 %, while only 6.7 % posted gains above 20 %. On the downside, about 11.9 % saw declines of roughly 10 % and 5.3 % recorded steeper drops of 20 % or more.

Looking ahead to the third quarter, enterprises turned more cautious. The share expecting production growth of 20 % or more fell, while the proportion anticipating flat or lower output rose. This suggests that the modest recovery in the second quarter has not yet translated into broad-based confidence for the second half of the year.

3 Domestic vs Export Orders: A Tale of Two Markets

Order patterns reveal a clearer divergence between the home market and overseas demand.

Domestic Orders

In the second quarter, 37 enterprises (about 40 %) reported year-on-year growth in domestic order value. Of these, 6.5 % posted strong gains and 33.3 % recorded modest increases. Another 37.6 % saw orders essentially unchanged, while 22.6 % experienced declines of varying severity. The picture is therefore one of gradual stabilisation rather than robust expansion.

Expectations for the third quarter remain muted: the majority of firms anticipate either flat or only slightly higher domestic orders.

Export Orders

Export performance was weaker. Only 3.2 % of firms recorded strong growth and 17.2 % modest growth. A full 58 % reported flat export order values, while roughly 21.5 % saw declines. The third-quarter outlook is similarly restrained, with most enterprises expecting little change and a non-trivial minority bracing for further softening.

4 Revenue and Profitability: Cautious Improvement

Revenue trends largely mirrored the order picture. About 34 % of enterprises reported either flat or higher revenue, with 6.5 % achieving growth above 20 % and 28 % recording gains of around 10 %. Forty-three percent described revenue as basically unchanged, while 22.6 % experienced declines of 10 % or more.

On profitability the numbers are more encouraging. Only 17.2 % of firms reported losses in the second quarter (13.98 % ordinary losses and 3.23 % severe losses). The large majority—roughly 83 %—either broke even or made a profit, with 35.5 % recording modest profits and a small 3.2 % reporting stronger gains. Looking into the third quarter, enterprises are moderately more optimistic about earnings than about volume, suggesting better cost control or mix improvement is already under way at many firms.

5 Key Operating Pressures Facing Enterprises

When asked about the main difficulties they face, enterprises gave a consistent ranking:

• Labour cost increases and recruitment difficulties – cited by 50.5 % of respondents
• Insufficient domestic market demand – 47.3 %
• Raw-material price volatility – 38.7 %
• Weak international demand – 34.4 %
• Followed by inventory build-up, tight liquidity and financing constraints

These pressures are not new, but their persistence helps explain why the recovery has been gradual. Rising labour costs in particular remain a structural challenge for an industry that still relies heavily on skilled manual processes in reeling and finishing.

6 Forward Outlook and Supply-Demand Signals

On the supply side, enterprises’ own assessments of the first-half cocoon harvest were mixed: 43 % judged output roughly in line with the previous year, 22.6 % saw a slight increase and 34.4 % a slight decrease. For the third quarter, the majority expect cocoon supply and demand to be roughly balanced, while the view on raw silk is more pessimistic—over half of respondents anticipate surplus conditions.

Price expectations for 4A-grade raw silk cluster in the RMB 420,000–460,000 per tonne range, with a mild downward bias. This suggests that any recovery in demand is not yet strong enough to push prices higher in a meaningful way.

When asked about the broader market outlook for the second half of 2026, the dominant sentiment is neutral: roughly two-thirds of firms describe both domestic and export markets as “average,” with optimistic and pessimistic views each accounting for only about 15–18 %.

7 What This Means for Overseas Buyers and Investors

For companies importing Chinese silk products or considering longer-term partnerships, several practical takeaways emerge from the data.

First, the industry as a whole has stabilised and is no longer in outright contraction. That reduces the risk of sudden widespread supplier distress. Second, performance is highly uneven. Medium-sized and better-managed firms appear to be holding up reasonably well, while smaller players or those heavily exposed to weak export channels face greater pressure. Third, cost inflation—especially labour—continues to squeeze margins, which may eventually feed through into pricing or quality trade-offs.

In practical terms, this environment rewards careful counterparty selection. A supplier that looks solid on paper may still be dealing with thin margins, rising wage bills or soft order books. Verifying registration status, ownership structure, litigation history, financial health and actual operating scale becomes more valuable, not less, when the industry is in a transitional phase.

Many overseas buyers and professional service firms already treat detailed Chinese enterprise credit reports and supporting documentation as standard due-diligence tools. Authoritative extracts from the National Enterprise Credit Information Publicity System, supplemented by multi-source risk and financial data, help separate reliable partners from those carrying hidden vulnerabilities. For transactions requiring formal recognition abroad, the corresponding notarisation or Apostille process remains an essential final step.

The second-quarter data from the China Silk Association does not signal a dramatic turnaround, but it does confirm that the worst of the recent contraction appears to be behind the industry. For international partners, the message is clear: the opportunity remains, yet it rewards disciplined selection and ongoing monitoring more than ever.