|
|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads |  |
MAY 9, 2005
There's No Holding Back China's Textile Tide On both sides of the Atlantic, the rhetoric about trade with China is intensifying. In Washington, U.S. Trade Representative nominee Rob Portman promised Congress on Apr. 21 he will take "a tougher approach" with Beijing than his predecessors. European Union Trade Commissioner Peter Mandelson declared on Apr. 24 that Europe is facing "a ruinous surge" of Chinese imports. French President Jacques Chirac called on Apr. 26 for more regulation of trade with China. The immediate issue: Booming Chinese sales of items such as underwear, trousers, blouses, and shirts in both markets. Since quotas on clothing and textiles were removed worldwide on Jan. 1 after a 10-year phase-out, Chinese textile and apparel exports to the U.S. increased 62.5% overall in the first quarter of 2005, vs. the first quarter of 2004, and in some some categories by 1,500% in a single month. China now controls 17% of the U.S. clothing market, up from 12% in December. The EU says imports of Chinese textiles in the first quarter rose anywhere from 51% to 534%, depending on the item. The result is an outcry from U.S. and European manufacturers and a rush to reimpose quotas on Chinese textiles and clothing within months. France has asked for emergency curbs sooner. The irony is that even if new quotas are imposed, they are unlikely to provide relief for the U.S. and European industries. According to rules that China agreed to when it joined the World Trade Organization in 2001, such "safeguard" measures can last only until the beginning of 2008. China would still be allowed to increase its textile exports to the U.S. and Europe during that period by 7.5% a year. Moreover, says Kenneth Chan, spokesman for the Federation of Hong Kong Garment Manufacturers, mainland makers could revert to their practice of skirting quotas by having third countries ship Chinese goods. Even if China loses some of its new export business, that doesn't mean work will flow back to Europe and the U.S. That's because China's low-wage competitors are gearing up to grab orders if buyers shift from China. Textile production "will still leave the U.S. and go to India and Pakistan," says Cao Xinyu, vice-chairman of the China Chamber of Commerce for Import & Export of Textiles. Pakistan imported $2.2 billion in machinery over the last five years to modernize its textile industry. Waiting in the Wings Aziz Memon, chairman of Karachi-based King's Group, a big knitware exporter, expects Pakistan's post-quota textile exports to grow by $1 billion -- or 12% -- a year. "India and Pakistan will be the [main] gainers from China's losses," he says. In India, Rajesh Mandawewala, CEO of Welspun India Ltd., the nation's No. 3 textile maker, says new factories coming on line should boost Indian textile exports from $15 billion last year to $50 billion in 2010. Wal-Mart Stores Inc. (WMT ), which buys an estimated $350 million in clothing from India every year, is expected to double its purchases in two years, Indian experts say. "Slapping quotas on China won't make the U.S. [clothing] industry more competitive," says Erik O. Autor, a trade lawyer with the National Retail Federation in Washington. No matter. The outcry over job losses in the U.S. and Europe makes action against China inevitable, however futile a gesture it proves.  By Paul Magnusson in Washington, with Manjeet Kripalani in Bombay, Naween A. Mangi in Karachi, Dexter Roberts in Beijing, and bureau reports Edited by Rose Brady
BW MALL
SPONSORED LINKS
Get BusinessWeek directly on your desktop with our RSS feeds.
Buy a link now! Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2005, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version