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Last Updated: Thursday, 20 November, 2003, 10:31 GMT
China retaliates to US import cap
Textile factory
China's textile sector is booming
China may raise tariffs on certain US imports, in retaliation to America's planned import cap on Chinese textiles.

China's trade minister Ma Xiuhong made the announcement in an interview with the official Chinese news agency.

It is the first sign that the row could turn into a full-blown trade war, although no details have yet been given about which US products will be hit.

China said it may introduce measures if the US does not agree with a WTO judgement to remove its steel tariffs.

Official complaint

The Chinese Government reserves the right to take further actions
Zho Wenzhong, Chinese Vice Foreign Minister

Before its tariffs announcement, the Chinese Government summoned the US ambassador in Beijing to officially complain against America's plans.

According to the Chinese foreign ministry, Vice Foreign Minister Zhou Wenzhong told US Ambassador Clark Randt that the government "was shocked at, and expresses dissatisfaction, with the US decision, which has been made despite strong opposition from the Chinese side".

Mr Zhou added: "The Chinese Government reserves the right to take further actions."

The US cap will affect Chinese bras, knit fabrics and robes, limiting the growth of their import to 7.5% annually.

Yet its enforcement is still subject to negotiation between the Chinese and Americans before it can take effect, and if carried out, will only affect less than 5% of Chinese textile exports to the US.

Smarting

Still this is enough to rattle a Chinese government still smarting over Washington's steel import tariffs.

Despite the WTO finding against the US on this issue earlier this month, the tariffs, as yet, remain in place.

The call for China to take a hard line against the textile limits has been led by its state-run media.

In an opinion piece the China Daily newspaper said: "The cheap political points the Bush administration scored by touting trade protectionism will prove costly for US consumers as well as trade."

It went on to accuse Bush's Government of trying to woo the US textile industry ahead of next year's presidential elections.

Relief

What is certainly true is that the US textile industry had called for relief against growing cheap Chinese imports.

"It is... clear the reason the number of manufacturing jobs in the US is falling has nothing to do with imports from China or anywhere else, but it's a political problem because there are many politicians in the US who have succeeded in blaming imports from China on manufacturing job losses," Andy Rothman, head of CLSA Asia Pacific Markets, told BBC World Business Report.

The US Government says the textile cap is allowed under the terms of China's accession to the WTO, which give members the right to impose temporary quotas if Chinese imports are found to cause market disruption.

China disagrees, with Mr Zho saying Washington had "misinterpreted and abused" the restriction measures.

Yet perhaps the main factor in influencing America's decision is growing concern about its giant and ever-increasing trade deficit with China, which ran at $103bn last year.

There is now speculation that the US is contemplating extending tariffs to Chinese furniture.




WATCH AND LISTEN
CLSA Asia Pacific Markets' head Andy Rothman
"Many politicians in the US who have succeeded in blaming imports from China on manufacturing job losses."



SEE ALSO:
Greenspan warning on protectionism
20 Nov 03  |  Business
China hits out at US textile cap
19 Nov 03  |  Business
US import curbs push dollar lower
19 Nov 03  |  Business
Asian steelmakers take aim at US
11 Nov 03  |  Business
US takes China to task on trade
27 Oct 03  |  Business
China to study currency shift
20 Oct 03  |  Business
Bush pledges Asia currency action
14 Oct 03  |  Business


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