China and the United States are scheduled to hold a new round of talks today as textile frictions between the two sides continue to flare as hot as Beijing's weather, a China's Ministry of Commerce official said.

"This round, which still concentrates on the technical level, is expected to pave the way for further talks in the Sino-US Joint Commission for Commerce and Trade to be held next Monday in Beijing," the source said.

The last round of Sino-US talks, in the wake of a deal China made with the European Union, was held on June 17.

Some insiders are wondering whether discussions between the two governments will be able to rescue two sides from their current imbroglio.

The China Chamber of Commerce for the Import and Export of Textiles warned Chinese textile exporters to stop exporting cotton trousers, shirts, and underwear to the US market because border officials may shut down traffic within a few days.

According to figures from US Customs, Chinese exporters have used up 96 to 98 per cent of their entire year's quotas in the three categories through July 5.

Statistics from the China General Administration of Customs shows that the clearance rate of these categories had all exceeded 100 per cent by July 4. Figures for man-made fibre shirts also had surpassed 100 per cent.

"Those companies whose products will be kept out the United States will have to bear large losses," said Liang Shiyu, an official with the chamber.

She explained they will have to pay more for shipment and stock no matter whether they are going to export the products to other countries or transport them back to China.

Meanwhile, it has been suggested that other companies who still have orders for various categories of textile products on hand should rev up their production and shipment and not sign new deals.

On the other hand, Chinese textile companies are exporting as many items as possible to European Union countries, cashing in on a "vacuum period" before the implementation of new management controls goes into effect.

Knowing that such practices might result in high risk, an official of a Shanghai-based textile manufacturer said producers had no other choice.

"How can we just wait and watch at home when all our competitors are doing so," said the official, who declined to be named.

The new management scheduled to take effect from July 20 will allocate EU quotas to the companies according to their exports last year and this year. But the exports before July 20 will not be counted.

If the remaining quotas to the United States and EU markets are not handled properly, a big blow to the Chinese textile industry, particularly small enterprises, is expected.

Canadian textile association also filed complaint to the Canadian International Trade Tribunal earlier this week in a bid to launch safeguard measures on nine categories of garments of China.

(China Daily July 8, 2005)