Textile enterprises responding to tariff hike
(Xinhua)
Updated: 2005-05-20 20:15

Chinese textile manufacturers are deciding how to cope with the blow of Friday's announcement that China will raise the export tariffs on 74 textile products beginning June 1, 2005.

Chinese companies will have to "make sacrifices," said Xu Zhongping, a marketing manager of Hangzhou Qiuyinong Garment Co., Ltd.

The company specializes in making suits, boy's clothing and jerseys. Its export volume is equivalent to approximately one- third of its annual output value. The tariff adjustment will mean a 400-percent hike for most products.

"I think the tariff hike will affect low-end textiles producers most. As for my company, the pressure from ensuing cost hike will not be overwhelming," Xu said. " We produce high-end garments and our exports are priced high. So we consider the increased cost basically tolerable."

The announcement was made in the wake of a United States decision this week to re-impose restrictions on seven kinds of China textile and clothing imports. The European Union is also pressuring China to take stricter measures to curb textile exports in the European market.

Han Licheng, secretary-general of Zhejiang Garment Association, understood that the tariff increase could also function as a leverage to readjust industrial structure. Key to the issue is that it is imperative for Chinese textiles exporters to stop down- selling-based competition with each other, He added.

However, Lin Houyu, chief engineer of Jiangsu Textile Group and Lin Chaohua, general manager of the foreign trade section of Wuxi No.1 Cotton Textile Factory, both from east China's Jiangsu Province, disagreed with Han.

They argued that given existence of localism, the tariff hike would fail to help upgrade domestic industrial structure in China. Textile enterprises under the protection of localism will always find a way to lower costs. Those outside the protectionist umbrella will suffer, they said.

Worst, the two entrepreneurs said the tariff hike would damage textile companies as much as the RMB appreciation. Their profits have been low enough. To ensure lean taking, they would like raise export prices. This would deprive the exporters of share on target markets.

On April 4, the United States announced it would stage a 90-day investigation on three categories of China's textile exports, namely cotton shirts and jackets, cotton trousers and underwear by cotton and artificial fabrics.

On April 6, the European Union also issued outlines of special trade protection measures against China's export of textile products, intending to restrict sales of 12 categories of Chinese textiles to the EU market.

On May 13, US Secretary of Commerce Carlos Gutierrez announced that the US government has decided to re-impose quotas on Chinese- made cotton trousers, cotton knit shirts and underwear.

During his meeting with a US Chamber of Commerce delegation in Beijing on May 16, Chinese Premier Wen Jiabao said the US restrictions were "not beneficial" for the sound development of Sino-US trade relations.

"China and the United States should proceed from the long-term perspective and work together to safeguard global textile integration, a major progress made in the world's multi-lateral trading system," said Wen.

On May 18, the United States announced that it would set quotas for import of another four categories of textile products from China, namely cotton and man-made fiber shirts (non-knitted ones), man-made fiber trousers, knitted shirts and jackets from artificial fabrics and combed cotton yarn.

Chinese Minister of Commerce Bo Xilai said on the same day at the 2005 Fortune Global Forum in Beijing that it was unfair that the United States and the European Union had blamed China for the fast growth of Chinese textile exports to their markets and had either imposed or intended to impose restrictions on Chinese products.

Developed countries should not take a "double standard" on international trade, which means they would ask the whole world to open market to their own competitive industries while keeping their own markets closed in any fields where they have no competitive edge, he said.

Close

Today's Top News     Top China News
China to raise export tariffs on 74 clothing categories         49 missing in Hebei coal mine explosions         Hanke: It would be 'foolish' to revalue yuan         Koizumi eyes China ties, defends shrine visits         Beijing to allow mainlanders to visit Taiwan         Textile enterprises responding to tariff hike	China to raise export tariffs on 74 textile goods       Biz survey: Gov't needs to improve       US business chief optimistic over yuan reform       A sign of things to come?       Go-west service plan bears fruit       A sign of things to come?