The National Development and Reform Commission (NDRC) has predicted that the textile and apparel export this year would top US$ 165 billion, with a year-on-year growth of 16 percent.

The projected rise is 9 percent less than the growth rate of last year, which the NDRC attributed in a recent report to the surging prices of raw materials, lower export tax rebate rates, rising yuan and trade frictions.

The report said local textile and clothing exporters would further lose their price advantages as the yuan which has risen by an aggregated seven percent against US dollar was expected to appreciate and squeeze profit margin for those low-added-value textile exporters.

Customs figures revealed that the sector grew by 15.6 percent year-on-year from January to May, 12.3 percent less than the national average.

Starting from July 1, the export rebate rates for footware and headgear dropped from 13 percent to 11 percent, for fabrics from seven percent to five percent.

Estimates from the China National Textile and Apparel Council said a two-percentage-point decline in export rebate normally costs the industry 4.8 billion yuan in profits (about US$ 634.5 million) and drives down profit margin by 0.26 percentage points.

The NDRC report warned that some domestically-made textile products might have to be phased out from the European market as a new regulation simplified as REACH and valid as of June 1 would impose stringent requirements on the quantity of chemicals in textile and clothing imports.

The export environments facing China's textile and clothing companies are getting increasingly uncertain as the EU-China Textile Agreement and the Sino-US Textile Agreement are due to expire by the end of this year and next year respectively.

"Anti-dumping, anti-subsidy and technical barriers will pose a serious menace to the industry," it warns.

Ma Xinzheng, a senior industrial analyst with Webtextile.com, said that textile companies should sharpen their edges through diversifying export markets and technical innovation. Focusing on mere exports volume and getting obsessed with price wars would only do harm, he said.

(Xinhua News Agency July 18 2007)