China took decisive action to ease rising concern in trading partners by hiking textile tariffs on more than 70 products by 400%.

The rise on 74 Chinese-made textile products will come into forced from June 1, China's Ministry of Finance announced on Friday.

The rise sent panic through the country's textile and garment industry.

Some have predicted factory closures and job losses.

The Ministry of Finance said in a statement on its website tariffs would rise from 0.2 yuan (2.4 US cents) to 1 yuan (12 US cents) per unit. The largest tariff increase would be from 0.3 yuan (3.6 US cents) to 4 yuan (48 US cents) per unit. And a new tariff of 3 yuan (36 US cents) per kilogram will be imposed on exports of flax yarn.

According to spokesperson for the Ministry of Commerce, Chong Quan, the decision was made after thorough analysis and research, and is aimed to further promote the upgrading of the Chinese textile industry and safeguard the rights of enterprises that deserve to benefit from the integration of the textile trade.

"It showed that the Chinese government's priority is to insure steady growth of the international textile trade," Chong said.

He added that China strongly opposed protectionism practised against "We had hoped that the increase margin would be smaller and a two or three-month period would be left for the companies to digest such hikes," a textile insider told China Daily yesterday.

The source said the measures would impose a great threat to textile and garment producers, particularly some small-sized factories.

Shell-shocked manufacturers

Some Chinese textile manufacturers said they were shell-shocked after the announcement and claimed the rise will drastically slash their profit margin.

"Our profit will be squeezed as we currently only earn 1 yuan (12 US cents) to 2 yuan (24 US cents) from each shirt," said Guo Jiahong, an official of Yangzhou Shuaimeisi Garments Ltd.

He said he was worried the government's decision might make it more difficult for the company to honor current four-month orders.

Guo said earlier protective measures initiated by the United States had practically shut the door to the US market for his company which produces cotton shirts.

Some entrepreneurs predicted that a number of textile manufactures would go bankrupt by August or September.

Sun Huaibin, spokesman for the China Textile Industry Council, was quoted by the Xinhua News Agency as saying his council understood the decision.

He said China, as a responsible country, made the concession in a bid to establish a stable trade order and ease current trade frictions.

However, he said, Chinese companies could have to make sacrifices.

The hike was welcomed by China's trade partners.

"We are encouraged by this move that the United States and China may be able to resolve other trade differences with a similar sense of fairness and moderation," said Charlie Martin, president of the American Chamber of Commerce in China.

He said this voluntary step by Beijing demonstrated China was adopting a constructive approach and was sensitive to the hardships which the removal of quotas has brought for some American workers.

However, the chamber said it would reserve further comment until they had examined in detail the impact of specific tariff increases on specific categories.

Meanwhile, China's Finance Ministry declared a lowering of tariffs on three categories of briefs and shorts and to abolish tariffs on some garment accessories.

Enterprises involved in manufacturing of such small textile commodities had complained they could not bear the high costs as the tariffs were charged in quantity instead of value.

100,000 Job losses

Some of China's major trade partners, including the United States and European Union, have long feared made-in-China textile products flooding their markets would hurt their domestic textile industry. Fears have increased since the global removal of quotas on textile products at the beginning of this year.

The US Department of Commerce and the European Commission launched an investigation into certain categories of textile products to consider whether to re-impose quotas on these commodities last month respectively.

The US Government announced initiated safeguard measures against three categories of textile products earlier this month; similar measures were imposed on another four categories last Thursday.

As a result, analysts predicted, about 100,000 Chinese workers in this sector might lose their jobs.

(China Daily May 21, 2005)