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Export textile tariffs rocket to 400 per cent
By Jiang Wei (China Daily)
Updated: 2005-05-21 01:13
China took decisive action to ease rising concern in trading partners by
hiking textile tariffs on more than 70 products by 400%.
The rise on 74 Chinese-made textile products will come into forced from June
1, China's Ministry of Finance announced on Friday.
A Chinese worker
sews a dress in a garment manufacturing company at Huaibei, east China's
Anhui province in this picture taken on May 19, 2005. China will raise
export tariffs on exports of 74 classes of clothing and textile products
from June 1, the Ministry of Finance said on Friday, a gesture that might
help to appease Western trading partners.
[newsphoto] | The rise sent panic through the
country's textile and garment industry.
Some have predicted factory closures and job losses.
The Ministry of Finance said in a statement on its website tariffs would rise
from 0.2 yuan (2.4 US cents) to 1 yuan (12 US cents) per unit. The largest
tariff increase would be from 0.3 yuan (3.6 US cents) to 4 yuan (48 US cents)
per unit. And a new tariff of 3 yuan (36 US cents) per kilogram will be imposed
on exports of flax yarn.
According to spokesperson for the Ministry of Commerce, Chong Quan, the
decision was made after thorough analysis and research, and is aimed to further
promote the upgrading of the Chinese textile industry and safeguard the rights
of enterprises that deserve to benefit from the integration of the textile
trade.
"It showed that the Chinese government's priority is to insure steady growth
of the international textile trade," Chong said.
He added that China strongly opposed protectionism practised against "We had
hoped that the increase margin would be smaller and a two or three-month period
would be left for the companies to digest such hikes," a textile insider told
China Daily yesterday.
The source said the measures would impose a great threat to textile and
garment producers, particularly some small-sized factories.
Shell-shocked manufacturers
Some Chinese textile manufacturers said they were shell-shocked after the
announcement and claimed the rise will drastically slash their profit margin.
"Our profit will be squeezed as we currently only earn 1 yuan (12 US cents)
to 2 yuan (24 US cents) from each shirt," said Guo Jiahong, an official of
Yangzhou Shuaimeisi Garments Ltd.
He said he was worried the government's decision might make it more difficult
for the company to honour current four-month orders.
Guo said earlier protective measures initiated by the United States had
practically shut the door to the US market for his company which produces cotton
shirts.
Some entrepreneurs predicted that a number of textile manufactures would go
bankrupt by August or September.
Sun Huaibin, spokesman for the China Textile Industry Council, was quoted by
the Xinhua News Agency as saying his council understood the decision .
He said China, as a responsible country, made the concession in a bid to
establish a stable trade order and ease current trade frictions.
However, he said, Chinese companies could have to make sacrifices.
The hike was welcomed by China's trade partners.
"We are encouraged by this move that the United States and China may be able
to resolve other trade differences with a similar sense of fairness and
moderation," said Charlie Martin, president of the American Chamber of Commerce
in China.
He said this voluntary step by Beijing demonstrated China was adopting a
constructive approach and was sensitive to the hardships which the removal of
quotas has brought for some American workers.
However, the chamber said it would reserve further comment until they had
examined in detail the impact of specific tariff increases on specific
categories.
Meanwhile, China's Finance Ministry declared a lowering of tariffs on three
categories of briefs and shorts and to abolish tariffs on some garment
accessories.
Enterprises involved in manufacturing of such small textile commodities had
complained they could not bear the high costs as the tariffs were charged in
quantity instead of value.
100,000 Job losses
Some of China's major trade partners, including the United States and
European Union, have long feared made-in-China textile products flooding their
markets would hurt their domestic textile industry. Fears have increased since
the global removal of quotas on textile products at the beginning of this year.
The US Department of Commerce and the European Commission launched an
investigations into certain categories of textile products to consider whether
to re-impose quotas on these commodities last month respectively.
The US Government announced initiated safeguard measures against three
categories of textile products earlier this month; similar measures were imposed
on another four categories last Thursday.
As a result, analysts predicted, about 100,000 Chinese workers in this sector
might lose their jobs.
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