China has announced plans to launch a new quota system to check its booming exports of textiles, a mechanism for effecting a deal reached with the European Union 10 days ago that eased trade friction.

China cancelled export quotas at the start of January as part of a global move to end textile quotas. But surges in textile and clothing exports upset the European Union and the US who sought to impose safeguards.

Under the new regulations, which go into effect on July 20, export licences issued by the Commerce Ministry will be determined based on a company's exports in the previous 12 months, said an announcement on the Commerce Ministry's Web site, www.mofcom.gov.cn.

The government was considering trade performance after the quota system was cancelled on January 1 "so that the phenomenon of transferring or trading of licences should not occur", the official Xinhua news agency quoted an expert as saying.

China agreed this month to limit annual growth in exports of various categories of textiles to the European Union to between 8% and 12,5%.

The quota system may be a move to appease the US, with which China is due to hold talks on textiles. A US embassy spokeswoman declined to say when talks would start.

The European Union has now moved on to investigating China's sales of cheap shoes.