The Countdown to 2005: As U.S. Industry Quakes, China Has Its Own Fears

Chinese authorities are growing concerned that many of their enterprises, which are undergoing privatization, will be unable to compete post-2005.

Workers at a Chinese apparel factory

Workers at a Chinese apparel factory.

Photo By WWD Staff

HONG KONG — The numbers are staggering: Last year, Chinese textile manufacturers produced 5.3 million tons of textiles, nearly one-quarter of the world’s output. China, the world’s largest cotton producer, accounted for 24 percent of the world’s total output of $121 billion. There are currently 70,000 textile and clothing enterprises in China.

With Chinese textile exports equaling $7.07 billion in 2002, there’s little wonder that American manufacturers are worried about what will happen when quotas on textiles and apparel are lifted among World Trade Organization members in 2005.

The prospect of cheap goods flooding the U.S. market and causing massive job losses at factories has Washington worried. Ironically, similar concerns affect China, which struggles with high unemployment, particularly in rural provinces, and the idea that in 2005, foreign-made goods will eradicate domestically produced ones.

The crux is that Beijing sees its textile industry as one of the few sectors that will not be adversely affected by the removal of quotas. The People’s Daily, a government paper that is widely seen as a barometer of official Chinese positions, reported, “Chinese textile firms will be best positioned to capitalize on the agreement.”

This contrasts with China’s telecommunications, banking and automotive industries, which are expected to take a backseat to foreign competitors in 2005. Indeed, one of Beijing’s aims is to get foreign investors to help out enterprises that are now state run. Lin Zongtang, president of the China Industrial Economic Federation, said foreign investors are “encouraged to join in the restructuring of China’s state-owned companies.” High on China’s wish list is help for its agriculture, high tech and manufacturing industries.

Unlike other sectors, the textile industry is more concerned with meeting demand than future competition. It is also following actions in the U.S. Congress carefully.

Last November, the National Association for Textile and Clothing Enterprises was formally established. The nongovernmental business association is designed to boost the development of China’s textile and clothing industry and also serve as an industry watchdog. It and the China Textile Industry Association are seen as likely to ask Beijing to execute counter-measures if the U.S. imposes new tariffs or other restrictions on Chinese-made clothing or textiles.
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