Chinese Government To Introduce Textile Export
Quotas
The Chinese Ministry of Commerce, in an effort to dampen
the effect of Chinese exports on the worldwide lifting
of textile quotas, has decided to impose quotas on Chinese
textile exports. The export quotas are mainly designed
to lessen the effect of Chinese textiles, which are exported
to rapidly go up from the current 18% of global production,
to more than 50% in three years.
Details about the export duties were not announced.
The European Union and other nations have put strong
pressure on the Chinese government to "manage"
the rapid growth in textiles which are expected to take
place shortly after the removal of the WTO textile quotas
at the end of this year. The removal of textile quotas
have long been expected to hit the economies of central
and south America, Bangladesh and Sri Lanka hard. In most
cases, outside observers believe that they will no longer
be able to compete against large, modern and highly efficient
Chinese textile factories.
At the most, the Chinese export quotas will give these
governments a little breathing time to transfer their
textile workers to other industries. These textile plants
are much less modern and inefficient than the Chinese
factories because they have not been able to get investment
money to modernize. Almost all of the textile investment
money has gone into modern Chinese facilities.
While outsiders see China as the leader in this field,
local Chinese textile companies in China are not nearly
as sanguine about the future of the textile industry in
China. Most see the intense capital expenditure on plants
as cutting into their profits, with the less capitalized
companies shutting down after being unable to become profitable.
Chinese companies in Zhejiang province, south of Shanghai,
have modernized and raised their production capacity preparing
for the lifting of the export quotas. Undoubtedly, they
will not be pleased with the Chinese government's export
quotas, and will put pressure on the government to minimize
their effect.
Because there is so much excess investment money flowing
into fixed assets and manufacturing in China, it has become
more difficult
for manufacturers to become profitable.
The four Asian tigers of Singapore, Hong Kong, South
Korea and Taiwan all started their economic modernization
with textile manufacture in the sixties, but now have
virtually no textile manufacture at all. Instead, they
have moved their textile plants to China, and have focused
more on services (Singapore, Hong Kong) or electronics
(Taiwan, South Korea), which have higher added value than
textiles.
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