The European Union has called on China to reduce its clothing exports to Europe or else face enforced limits.
China is the world's dominant force in textile production
That was the warning given by EU trade commissioner Peter Mandelson, as he launched an EU probe into nine categories of Chinese textile exports.
Exports of certain Chinese clothing items to Europe have surged by more than 500% since an international quota system came to an end on 1 January.
Under World Trade Organisation rules, the EU can now bring in import limits.
'Time for action'
"Europe cannot stand by and simply watch these developments unfold," Mr Mandelson said on Sunday.
"The time has come to take further action."
The EU study will now look at the sharp increases in exports of Chinese T-shirts, pullovers, men's trousers, blouses, stockings and socks, women's overcoats, brassieres, flax or ramie yarn, and woven fabrics flax.
Under the old Multi Fibre Agreement clothing and textiles quota system, which started in 1974 and came to an end on 1 January of this year, each nation was set export limits.
Since then China has increased its exports substantially, as it continue to take advantage of its cheaper labour and manufacturing costs.
According to figures from the World Trade Organisation (WTO), China made 17% of the world's textiles in 2003, but this is expected to rise above 50% within three years.
And data from the European Commission itself shows that imports of Chinese T-shirts into EU member states rose by 164% in the first three months of this year, while imports of pullovers leapt by 534%.
WTO rules state that countries which can prove that excessive Chinese clothing imports are causing "market disruption", can limit the growth in Chinese imports to 7.5% a year until 2008.
Mr Mandelson said that while the EU probe would continue, he urged China to unilaterally take the necessary action to reduce its exports.
"I urge China to take a fresh look at the measures they have put in place already and explore whether they cannot do more," he said.
"I have also asked for concrete evidence that their measures are having an effect."
Mr Mandelson's comments came after the French industry minister Patrick Devedjian said some 7,000 French textile jobs could be at risk unless China limited its exports.
"The situation is very serious ... for our businesses which make these products, which have already been suffering for a number of years," said Mr Devedjian.