Trade restrictions on China's textile exports could undermine the industry's performance this year, insiders warned.
The country's rapidly growing textile exports have alarmed some trading partners, prompting their local industries to call for restrictions on Chinese-made products, said Cao Xinyu, deputy director of the China Chamber of Commerce for Textile Imports and Exports.
The European Union (EU) recently released an amended regulation, which sets down special provisions targetting Chinese textiles and apparels.
The new EU provision states that should they threaten to impede the "orderly development" of textile and apparel trade, the imports may, at any time before 31 December 2008, become subject to restrictions.
In another development, the American Textile Manufacturers Institute filed a petition on September 5 last year with the US Government.
The petition, now under consideration, could result in additional quotas on certain Chinese textile products.
"The increase in Chinese textile exports was to be expected after China joined the World Trade Organization. It reflects the preferences of foreign traders, salesman and consumers, and the improved competitiveness of China's textile industry ," said Cao.
Cao said the chamber is communicating with related departments and organizations to minimize possible trade barriers.
But Chinese players in the textile industry should be aware of the risk of new restrictions this year, Cao said.
"Many companies, buoyed by the industry's good performance last year, plan to invest more. But I believe they should be more cautious because of the uncertainties this year," Cao said.
Sun Huaibin, director of the Textile Economic Research Centre, said local textile and clothing manufacturers should stop trying to attract consumers by discounting their goods and develop different products instead.
The fall in export prices for Chinese textiles and garments is harming the industry's profits, said Sun.
The export prices of apparel have dropped by about 30 percent compared with five years ago.
According to statistics from the General Administration of Customs, textile exports now earn US$61.77 billion, up by 15 per cent year-on-year. Imports were valued at US$14.36 billion, up by 3 per cent.
Cao said the strong performance of the textile industry was largely driven by quota increases for Chinese products after the country's entry into the WTO.
The US and EU eliminated quotas on 97 Chinese goods in 2002. Quota restrictions on another 17 items were also partially lifted.
Textile exports to the United States were valued at US$7.07 billion, surging by 15 percent. Exports to the EU also increased by 23 percent to US$6.417 billion.
(China Daily February 25, 2003)