Hu Weidong, chief analyst with Xiangcai Securities' research and development center, was quoted in yesterday's Shanghai Securities News as saying that, though textile trade frictions are likely to intensify, the chance of a trade war is slim as the proportion of textiles in China's total export volume decreases.

 

Since global quotas were scrapped on January 1, the US and EU have set limits on textile products imported from China, saying that surges in Chinese imports disrupted their markets.

 

China and the EU signed a memorandum on Chinese textile products to Europe in June and reached an agreement in September, but an agreement with US has not been reached after six rounds of negotiations.

 

The last round of talks with the US was held in October 12 and 13, and the American side has imposed limits on nine categories of Chinese textile products so far.

 

Textile products and raw materials' share of total export volume began to fall in the 1990s and was 20 percent in 2003. The percentage of gross export products in China's GDP showed an increasing trend and reached 30 percent the same year.

 

Hu said one way to cope with the current situation was for domestic textile manufactures to follow voluntary export limits as steel companies did to deal with rocketing iron ore prices.

 

Unlimited exports would impair the interests of textile firms in the export destination countries, Hu said, who would adopt countermeasures that would hurt the interests of Chinese textile companies.

 

Voluntary export limits could also help improve the quality of exports, according to some experts, since with volume limited higher value products could bring more profits for textile companies.

 

(China.org.cn by Yuan Fang October 26, 2005)