U.S. Slashes China Textile Import Quotas by Up to 35% : Trade: At the same time, officials announce the lifting of restrictions on the export of at least three satellites.

In a crackdown on efforts by garment and textile manufacturers in China to evade limits on shipments to the United States, the White House on Thursday announced steep reductions in import quotas for Chinese textile products ranging from sweaters to shop towels.

In some cases, the Clinton Administration cut the limits by as much as 35%.

At the same time, the Administration accommodated China’s longstanding interest in expanding its access to U.S. space technology, announcing the lifting of restrictions on the export of at least three satellites, imposed in August by the State Department. Decisions on other more militarily sensitive satellites were deferred.

The Administration’s actions came as Washington was struggling to forge a new relationship with Beijing--built on trade, weapons sales and promoting human rights--that could have ramifications well beyond the affected industries. But by getting tough in one area of its relationship with China while easing its restrictions in another, it appeared to be sending conflicting signals.

The textile dispute, which has been simmering for three years, involves what Administration officials characterized as massive shipments of $2 billion worth of goods made in China but carrying manufacturing labels from other countries. The dispute also involves direct shipments exceeding U.S. limits on exports to this country.

In one case, U.S. Trade Representative Mickey Kantor said, China shipped 3.6 million sweaters to Macao, a Portuguese territory near Hong Kong with a population of 475,000.

“The climate is such that it would be very unusual for each of them to buy eight sweaters a year,” he said at a news conference. Instead, he said, “Made in Macao” labels were attached and the sweaters were shipped to the United States, falsely declared as products of Macao. Other stopping-off points included Honduras, Panama and roughly 20 other countries, Kantor said.

The textile decision places the Administration in the middle of a dispute involving two politically active interest groups.

Textile manufacturers and unions had been angered by an easing of import restrictions included in just-concluded global trade talks in Geneva and applauded the decision to limit the imports of clothing and fabric from China.

Carlos Moore, executive vice president of the American Textile Manufacturers Institute, said that $2 billion in imports could be translated into 50,000 U.S. jobs.

But retailers were angered by the Administration’s decision, seeing it as one that will force them to sell higher-priced goods made in the United States.

Kantor said the decision will have no impact on prices paid by consumers. But Robert Hall, vice president of the National Retail Federation, which represents such major retailers as J.C. Penney, Kmart, Gap and Sears, Roebuck & Co., disagreed.

“We think it will have a pretty big impact on low- to moderate-priced items--cotton trousers, knit shirts, cotton sweaters--for sale to low-income consumers,” Hall said. Asked if U.S. makers could fill the gap, as Kantor argued, Hall said, “Not at the same quality and price.”

The Chinese Embassy in Washington did not respond to a telephone call seeking comment on the developments Thursday.

The overall U.S.-Chinese relationship is being conducted under the unsettled cloud of the low-tariff trading privilege, known as most favored nation status, which expires at midyear. Renewal of the sought-after benefit hinges partly on China’s adherence to international human rights standards.

China is the largest U.S. supplier of textile and apparel imports. Efforts to negotiate a new textile trade agreement, to replace one that expired Dec. 31, have been unsuccessful, and the lowered quotas are seen by experts in U.S.-China relations as an effort to increase pressure on Beijing to return to negotiations.

In the year ended Oct. 31, the textile products covered by the agreement and shipped to the United States were valued at $4.68 billion.

Quotas will be cut 25% on most products but 35% on the eight categories where trans-shipping has been most active. The new quotas, which will apply to products entering the United States since the start of the year, will trim sanctioned Chinese shipments by $1.1 billion to $1.2 billion a year, Kantor said.

The satellite exports involve communications equipment built by Hughes Aircraft and Martin Marietta.

Under the agreement, Hughes will obtain an alternative license from the Department of Commerce to export one satellite to China for launching aboard a Chinese rocket, according to Rep. Jane Harman (D-Marina del Rey).

Hughes Chairman C. Michael Armstrong received the approval in Washington on Thursday, Harman said.

Hughes spokesman Richard Dore in Los Angeles said the Commerce Department is expected to announce the accord today. He called the deal “a good first step” that Hughes hopes will lead to all of the satellite-export restrictions being lifted.

Times staff writers Ralph Vartabedian and Jim Mann in Washington and James F. Peltz in Los Angeles contributed to this report.