Textile Curbs May Not Help U.S.

China’s decision to slow the growth of its textile and apparel exports may help competitors in poor countries but probably won’t create more business for higher-cost U.S. producers, industry analysts and officials said Monday.

And those American producers vowed to continue pushing for curbs on popular Chinese products.

Faced with mounting global criticism, China on Sunday announced steps to control its surging textile and apparel exports. The steps will include the creation of an export duty plan to discourage production of cheaper products by taxing them more heavily, according to the official Chinese state media.

China’s action could defuse criticism in the United States and Europe, where governments are under pressure to restrict Chinese imports after global apparel and textile quotas are eliminated Jan. 1. Critics contend that the end of the decades-old quota system will trigger a drastic shift in production to lower-cost Chinese factories and the loss of millions of apparel and textile jobs, primarily in the developing world.

Brenda Jacobs, counsel for the Assn. of Importers of Textiles and Apparel, said China’s move was a positive sign that the government was trying to think creatively about how to respond to growing concerns about that country’s exporting heft.

Within three years of the quota phaseout, China is expected to grab at least half of the world’s global apparel and textile trade, according to a World Bank study.

The likely beneficiaries of China’s stemming export growth would be producers in poor countries such as Sri Lanka, Bangladesh and Vietnam, which are most competitive in cheaper commodities such as T-shirts and khaki pants.

By contrast, it could create a new headache for U.S. apparel importers already struggling with rising shipping costs and general uncertainty about the pending transition to a quota-free world: China could end up increasing the competition with higher-cost textile and apparel producers in the United States, Europe and elsewhere. Indeed, in the 1970s, Japanese producers agreed to restrain their exports of low-cost automobiles -- and moved into the higher-end models that now dominate the U.S. market.

In addition, some of the investment and cheap labor that might have been absorbed by the Chinese textile industry is likely to be diverted to production of other products, such as consumer electronics, appliances and furniture.

“Certainly in the near term ... this will be useful for American textile and apparel producers, but it will increase Chinese export pressures in U.S. markets on other goods,” said Peter Morici, a trade expert at the University of Maryland. A more effective way to slow China’s growth, he said, would be to allow the country’s currency to appreciate, which would make its exports more expensive.

Mary Brown Brewer, a U.S. Commerce Department spokeswoman, said Sunday’s announcement “seems to acknowledge concerns” about a possible surge in Chinese exports but noted that “China has yet to provide critical details of its intentions.” Brewer said the Bush administration would continue to work with China and other countries to ensure an “orderly transition from the textile quota system.”

U.S. textile manufacturers said Monday that they didn’t take China’s promise of self-restraint seriously and vowed to continue their battle to restrain Chinese imports, including filing petitions asking the U.S. government to impose curbs.

“We’re not going to change our position with China,” said Lloyd Wood, a spokesman for the American Manufacturing Trade Action Coalition. “This is definitely the fox guarding the henhouse.”

There was widespread confusion Monday about the implications of China’s move because the government didn’t release specifics. In state media reports published Sunday, a Chinese Ministry of Commerce spokesman said the duties would be assessed on individual goods rather than by value. That would end up taxing cheaper goods more heavily and encourage production of higher-value apparel and textile production, he said.

Trade specialists in China said a list of the goods to face higher export taxes should be published shortly, and they probably would contain “sensitive products,” such as socks and brassieres, that have already come under scrutiny from import countries.

In addition, the government reportedly said it would take other steps to manage its textile and apparel sector after 2005, such as providing better data on investment and exports, discouraging “irrational” investment, improving industry standards and management and encouraging investment outside China.

Textile and garment companies in China reacted cautiously to the announcement.

In the northeastern port city of Dalian, the general manager at Huili Clothing Auxiliary Materials Co., which produces high-quality polyester thread, said it was better that China set its own limits rather than face more curbs from export markets.

“In the short term, we will all have to adjust to the policies,” said the manager, who would give only her family name, Zhang. But over the long haul, she said, it would be good for China’s competitiveness as more firms move up the value chain.

Many Chinese manufacturers already have upgraded machinery and improved production capabilities, helping to boost both the quantity and quality of exported goods, according to the China Textile Economy Research Center. In the first 10 months of this year, production in China’s textile industry rose by 25% from 2003 levels.

However, Qi Shuwen, owner of Xinji Socks Co. in Datang, said he felt “sad and uncomfortable” when he heard the news about the government’s plans. Qi’s 70-employee company makes synthetic socks for export to the United States, but he said orders had fallen in recent months. This fall, the Bush administration announced that it would place limits on imports of Chinese-made socks.

“This will add to the pressure,” Qi said of the government’s proposed export duties.

In addition to buying goodwill, the plan might also be a way for the Chinese government to raise money, given that it’s losing a lucrative source of income with the disappearance of quotas. The Chinese government, like many others, allocates its quota to factories and brokers.

U.S. apparel makers said they couldn’t evaluate the effect of China’s tariff plan on their sourcing until they knew more details.

Separately, the Bush administration announced Monday that it planned to restrict imports of some types of popular apparel early next year because some countries had exceeded their quotas for 2004.

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Iritani reported from Los Angeles and Lee from Shanghai. Zhang Xiuying of The Times’ Shanghai Bureau contributed to this report.