Some sources have claimed that China will become dominant even if quotas curbing the free flow of textiles and apparel are lifted. Under the Agreement on Textiles and Clothing (ATC), all quotas restricting textile and clothing trade between World Trade Organisation (WTO) members will be eliminated by December 31st, 2004. .
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This has led many countries, particularly the US, to predict that Chinese textiles back by low labour costs, will swamp’ the world market and lead to job losses and falling market share in other countries. The Chamber has described this claim as sensational. .
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The Chinese argument is that dominance is not possible given China continuing reliance on manufacturing low-end products and on increasing production quantities. .
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However, the Chamber concedes that the growing role of China is creating a huge demand for cotton and driving up the price of cotton imports. These price rises will partly offset China advantages of cheapness and quantity. .
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The Chamber also believes that rising costs in China mean that a degree of low end production will shift to other developing countries. There is an element of truth in this as production costs are rising fast in areas such as around Shanghai where labour costs are growing quickly. .
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However, a report by the US International Trade Commission (ITC) that examined the competitiveness of foreign textile and apparel suppliers following the imminent 2005 quota lift stated that China is expected to become the “supplier of choice” for most US textile and apparel importers after 2005. .
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In response to this the ITC urged US importers to expand trade relationships with other low-cost countries, such as India, Bangladesh and Pakistan, to reduce the risk of sourcing from only one country. .
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At the same time China is looking to increasingly shed its low end reputation by developing a capital- and technology-intensive textile industry rather than a labour-intensive one which increasingly involves a lot of work for diminishing returns. .
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All the while the US is continuing to try and limit any damage being done to its domestic industry by China with the decision to re-impose quotas on Chinese imports of knit fabric, dressing gowns and bras. .
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Source: Access Asia
Date:2/19/2004
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