Concerns voiced over China textile threat

American textile executives and international trade organizations view the end of quotas on Chinese textile goods, slated for January 2005, a reason for both grave concern and action.

In June, representatives from 25 countries gathered in Brussels at an emergency Summit on Fair Trade in Textiles and Clothing. Only days later, 100 American textile/apparel company CEOs and trade representatives descended on Washington to lobby for government action to urge the World Trade Organization to extend the quotas for three years—a move industry representatives from 47 other countries put forward earlier this year.

"Our back is to the wall," said James Chesnutt, vice chairman of the newly organized National Council of Textile Organizations (NCTO). "With China's enormous unfair trade advantages, this 200-year old industry, still the largest manufacturing employer in America, will be wiped out within two years if the government does not act."

In the trade categories previously released from quota in January 2002, China jumped from 9 percent to 65 percent world market-share dominance. Thailand, the next largest shareholder, simultaneously saw a decline from 10 percent to 4 percent of the market. In quota-free categories, 31 countries suffered between 75-percent and 100-percent loss of share, with 40 countries suffering a 50-percent to 74-percent decline, according to the NCTO.

"To make matters worse, Chinese market share in these categories is still increasing," said Cass Johnson, NCTO President. NCTO claims that the end of quotas threatens 30 million jobs worldwide.

China has concentrated on aggressively modernizing its textile-apparel manufacturing industry over the last 25 years, transforming the country into the world's largest textile economy. According to the International Textile Manufacturers Federation, the industry represents 10 percent of China's GNP and 20 percent of its industrial output. China's primary modernization focus has been on where it could most quickly establish competitive dominance—in apparel—due to its vast labor pool.

The more capital-intensive modernization of textile machinery lags comparatively, resulting in China remaining one of the world's leading textile importers. Chinese textile manufacturing modernization, however, is sizeable. A recent joint Conference Board/National Bureau of Statistics study in China assessed China as having lost nine times as many jobs in textiles than the U.S. between 1995 and 2002. The primary cause: modernization resulting in improved productivity.