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China Fights Back on Textiles

Published date:
Wednesday, 18 May 2005

China slammed the United States and European Union on Wednesday for "unfair" and "protectionist" actions to counter its booming textile exports, while dismissing claims it manipulated its currency to gain an unfair trade advantage.

Commerce Minister Bo Xilai blasted developed countries for arguing for global standards on free trade when they enjoyed absolute advantages but then placing restrictions when their interests were threatened.

Under World Trade Organisation (WTO) rules, such "double standards are not allowed," he said.

The US and the EU were unreasonably blaming China for rapid growth in its exports and were taking "protectionist" actions to counter this.

"This is unfair," he said, adding that these kind of moves "undermine the solidness of WTO rules and generate a negative impact on the ongoing round of (WTO trade liberalisation) talks."

At the same time, China said the US should first get its "own house in order" before charging that Beijing's currency regime poses a risk to its trading partners.

Surplus not only with US

"We cannot accept that," said Wei Benhua, China's State Administration of Foreign Exchange deputy administrator in reaction to a US Treasury report stating that China's "highly distortionary" currency regime threatened global growth.

"We do have a surplus with the US. However we also have (trade deficits) with many of the European countries ... and also with the Southeast Asian region," Wei said at a forum in Singapore.

"So how do you manipulate your currency just to get a surplus with the US?"

The US Treasury report stopped just short of saying China was a currency manipulator under a US legal definition, which could have opened the way to US sanctions, but warned it may earn that label if "current trends continue".

US discontent at Chinese trade policies has crystallised around the yuan's fixed rate currency system, with the yuan pegged for a decade at around 8.28 to the dollar.

Beijing maintains that it will not be bullied by the US or any other nation into rushing any changes.

Tens of millions of Chinese workers affected

The EU cranked up the tensions on Tuesday when its executive arm launched emergency measures that could lead to limits on T-shirts and flax yarn from China if Beijing does not take more action to rein in its exports.

On Wednesday, European Commission chief Jose Manuel Durao Barroso added to the pressure, saying the EU was "ready to go further" than the emergency measures.

The move followed Washington's decision last week to re-impose quotas on Chinese-made cotton knit shirts and blouses, cotton trousers, and cotton- and man-made fibre underwear.

While concern has focused on job losses in the US and EU, Bo also pointed out that the livelihoods of tens of millions of Chinese workers were involved.

"The textile industry, which has a low added-value, has a bearing on the livelihoods of tens of millions of low-income workers in China," he said.

To control its exports and placate its critics, China has already raised taxes and lowered export rebates on textile products and Premier Wen Jiabao vowed last week there would be more measures.

Regularly updated trade statistics on include (Click to follow the links):

  • All Countries’ AGOA and GSP Trade Overview

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.

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