The United States, the largest destination of China's textile and clothing exports, could impose a 27.5 percent tariff on China's clothing exports if negotiations and discussions on the issue produce no results.

Chinese industrial insiders say in this market environment, China's textiles are likely to see a further decline in their rateof growth.

According to the China Chamber of Commerce for Import and Export of Textiles (CCCIET), China's direct textiles and attire exports to the United States reached 21.9 billion U.S. dollars in 2006, making up 15.24 percent of the United States market, a drop of 1.42 percentage points from the previous year.

The Chinese government began lowering export tax rebates for textiles last year. The CCCIET and other relevant institutions have established a mechanism to monitor exports of certain commodities to control growth rates.

Shi Hongmei, an analyst with the Oriental Securities, said the appreciation of RMB and cut in export tax rebates would have a negative effect on domestic textile enterprises. Changes in the market environment would also boost industrial adjustment and integration, such eliminating small and less competitive enterprises, and spurring mergers to form large textile conglomerates.

Guotai Junan Securities report shows that overall retail sales in China rose by 14.7 percent in the first two months in 2007 compared to the same months last year. Sales of clothing, shoes and caps rose by 27.9 percent year-on-year, 8.6 percentage points higher the grow over the same period last year. The report did notreveal total sales volume.

Sales of textiles and clothing have been picking up on the domestic market in recent years and the trend is expected to continue if not increase, said Shi.

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