China Restrained but Undaunted

Despite political threats and fresh quotas, China is poised to strengthen its lead as the top U.S. supplier of textiles and apparel.

WASHINGTON — Threatened by Congress and restrained by a new set of quotas, China has taken some blows, but is still poised to strengthen its lead as the number-one producer of textiles and apparel shipped to the U.S.

Still, the restraints on China have opened up an opportunity for other countries, such as India, to develop their industries, beef up their infrastructures and become more important sources of apparel bound for the U.S.

"It continues to be a buyer's market," said Bob Zane, senior vice president at Liz Claiborne Inc. "Lots of product is available from lots of different sources, and many of the [factories] continue to solicit business by offering better conditions and more services."

That advantage for importers won't last, said Zane, who expects a "shaking out" or consolidation of production down the road.

"The world will wind up with fewer factories in fewer countries doing more things, providing more and more services, as well as more and more product," he said.

China will continue to grow, eventually producing 50 to 80 percent of U.S.-destined apparel, said Zane.

Last year, the country captured 33 percent of the apparel and textile import market to the U.S. with shipments of 16.8 billion square meter equivalents valued at $22.4 billion.

The overall trade deficit with China, which hit $201.6 billion last year, has fueled efforts to clamp down on the country, including a restrictive import agreement inked in November.

Under that deal, 34 types of goods from China — ranging from cotton trousers to knit fabric and valued at more than $6 billion — are restrained by quotas, which gradually allow larger shipments to the U.S. before expiring at the end of 2008.

There is a provision in the deal that allows for quotas on additional categories, though it is unclear how likely or when those restrictions could be applied. Domestic textile groups are working on somehow extending restraints on Chinese imports beyond 2008.

The accord was counted as a win for the domestic textile industry, which used its clout on Capitol Hill to push for the restrictions. At least some importers, however, seem to have taken what they saw as a lemon of an agreement and made lemonade.

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