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Textile firms likely to feel the squeeze

By Jiang Wei (China Daily)
Updated: 2009-01-23 08:02

Customers shop for clothes at a store in Beijing. [China Daily]

China's commerce ministry has said textile export growth is poised to slow down further this year and indicated that it does not plan to go back to the quota system in textile trade.

Related readings:  China's textiles and garments export growth slowing  Textile firms see profits decline for 1st time in 10 years  New world for textile exports as quota system ends

The growth rate in China's textile exports will continue decreasing this year and there will be no "big increases" in exports to the US and the EU markets although quota restrictions on exports to the two markets have been eliminated from the beginning of this year, the ministry said in a statement on its website.

It added China's exports are not going to pose any threats to exporters in other countries.

Textile exports totaled $185.17 billion in 2008, up only 8.2 percent from a year earlier, statistics from the General Administration of Customs showed.

The growth is 10.7 percentage points lower than that of 2007.

Analysts attributed the decline in exports growth to rising labor costs, appreciation of renminbi and weakening demand from major markets.

In 2005, Washington and Brussels reached agreements with China to restrict Chinese-made textiles and garments, saying the lapse of previous global restrictions was giving way to a surge of cheap products from China that threatened their own manufacturers.

Some US and EU industry groups have called for fresh limits when these agreements expired at the end of 2008.

The ministry has urged international textile makers to abide by the principles of free trade and asked importing countries not to erect more trade barriers.

China's textile industry saw its profits drop 1.8 percent to 104.2 billion yuan in the first 11 months of last year, the first decline in a decade. Over one-fifth of the textile enterprises were in the red last year while most of the others managed to eke out only meager profits.

In order to bail out the industry, which provides 20 million jobs in the country, the government is also drafting a stimulus package for the textile industry, including preferential loans, to boost sales and create jobs, the National Business Daily reported.

The newspaper quoted Yang Jichao, secretary general of the China National Textile and Apparel Industry Council, as saying the package aims at accelerating restructuring of the sector, improving innovation, upgrading technology and cultivating self-owned brands.