THE FLANARANT: Textile investments keep China's cutting edge

Government support
But why are all these hard-headed Chinese businessmen throwing so much money into manufacturing something that's supposed to be so uncompetitive? Probably because of Western and Chinese governments.

The second key factor in textile mill competitiveness is continuous production. A garment factory might run for just 10 hours a day, and doesn't pay workers when it's closed. A spinning or weaving mill is paying interest and depreciation on its expensive kit 24 hours a day, whether the factory's working or not. So it's important to keep that kit operating flat out.

The likelihood of that happening is higher in China than almost anywhere else in the world.

China's factories also benefit from almost continuous power supply. That's a luxury almost no other Asian country can offer.

Mills in Pakistan's Punjab have now got to a point where they can't believe government assurances about power availability. The lights go out randomly, whatever promises mill owners are offered - and businesses came to a halt. In Indonesia, demand for power is growing almost three times as fast as availability.

For all sorts of reasons, China's government is simply the most reliable major government in the developing world at ensuring power generation and transmission capacity will grow at the same pace as its economy.

Trading rules
But it's not just reliable power that gives investors confidence. Western governments help too.

Europe, the US and Japan have all recently changed parts of their trading rules in a way that actively encourages the use of Chinese spinning and weaving mills.

Since the beginning of this year, the EU has given the world's poorest countries duty-free access for garments made from raw materials originating anywhere in the world - which means Chinese yarns and fabric.

In early spring, Japan changed its rules to provide the poorest countries with duty-free access for knitwear using anyone's yarns (which inevitably means Chinese yarns). In 2010, the US agreed to allow Haiti almost unlimited duty-free access for garments using fabric and yarn from anywhere (which means Chinese raw materials).

And in late spring, the US Administration announced it wanted to extend duty-free access for African countries' garments made from other people's raw materials until 2022. Again, "other people's" in practice means Chinese.