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Textile Industry to Enter Restructuring Period
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The 11th Five-Year Guideline period (2006-2010) will be an important period for the restructuring and adjustment of China's textile industry, the International Business News reported.

Regulating the textile trade order and industrial regrouping will be important tasks in the near future, the newspaper, affiliated to China's Ministry of Commerce, quoted sources with the China Chamber of Commerce for Import and Export of Textiles as saying.

Thanks to global termination of textile quotas at the beginning of 2005, China's surplus from textile trade jumped 25.5 percent year on year to US$89.29 billion in the January-November period of 2005, making up 98.3 percent of the country's total trade surplus.

Meanwhile, China's import and export of textile products grew 18.4 percent to US$120.35 billion, accounting for 9.4 percent of the country's total cargo trade, which shows China's huge comparative advantage in this area.

The profits of Chinese textile exporters, however, did not rise simultaneously, and many even witnessed a drop in profits, the newspaper said.

Increasing and diversified international trade protectionism has affected and will continue to reduce the profit potential of Chinese textile enterprises, it said.

Unprecedented trade limits by developed countries as well as developing ones, appreciation of renminbi, rises in the costs of labor, raw materials and energy will impose enormous pressure upon China's textile industry.

In 2005, the United States and the European Union started strict limitations upon rocketing textile imports from China. The Chinese government held rounds of textile talks with the two trade partners, resulting in two agreements in this area that set expectable quotas upon future Chinese textile exports.

In order to get the quotas, many Chinese textile manufacturers had to lower their export prices, which reduced their profits remarkably.

Figures from Chinese customs show that in the first eleven months of 2005, the average unit price of knitgoods to the United States dropped 43.69 percent year on year, and that of Chinese cotton yarn and cotton-made knitting clothing to the European Union dropped 21.56 percent and 13.17 percent.

The Chinese textile industry is still weak in innovation, research and development, lacking core competitiveness and famous brands, the newspaper said.

Expecting the global termination of textile quotas, Chinese textile firms blindly increased the fixed asset investment in this area in the past few years, it said.

In 2002, the fixed asset investment in the textile industry grew 29.07 percent year on year; in 2003, the growth rate rose to 66.7 percent. In 2004 the investment in the textile industry still maintained a growth rate of 30.2 percent.

The expanding investment has led to the serious problem of oversupply in this industry, as well as disorder in this sector. From 2001 to November 2005, the number of Chinese textile and apparel exporters rose from 21,099 to more than 65,000.

The sudden increase of exporters led to a slump of export prices and increasing international trade protectionism, so the government and the chamber of commerce have decided to make efforts in the next five years to regulate the industrial order and lift up core competitiveness, according to the newspaper.

(Xinhua News Agency January 23, 2006)

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