NCTO - China's textile industry now growing so quickly

01 Nov '07

2 min read

In testimony before the U.S. International Trade Commission on Tuesday, NCTO detailed 73 subsidies which the Chinese government offers to its surging textile industry and urged Congress to pass meaningful currency legislation, among other steps.

In verbal remarks, NCTO President Cass Johnson noted that with massive amount of government financial support, China's textile industry is now growing so quickly that within five years it would employ more people than the entire U.S. manufacturing complex.

Among the key facts Johnson related:
• With four times the size of any other country's exports, China's textile and apparel exports are growing at an annual rate of 20 percent.
• China's $12 billion gain in apparel exports in 2005 was greater than total exports of 46 of the top 50 apparel exporters in the world.
• Through its government intervention, China's textile industry has invested $85 billion during the last ten years, with the biggest increases coming in 2006 and 2007.

Regarding the 73 subsidies, Johnson stated that 24 of those subsidies contained illegal export requirements, 16 are subsidies for technology upgrades and research and development, 11 offer income tax reductions or holidays while eight subsidize loan costs or offer loan forgiveness. Other subsidies include land grants, lower utility costs, brand development grants, VAT exemptions, raw material rebates and worker benefit exemptions.

Johnson warned that with the China safeguard expiring soon in the U.S. and Europe, textile and apparel producers around the world are in jeopardy. He noted “if China merely follows past history, it will take 65 percent of the U.S. and EU apparel markets once the remaining safeguards are removed.” In dollar terms, this means China will take $44 billion in export trade currently held by other countries.

In addition to the potential loss of hundreds of the thousands of US textile jobs, Johnson cited the economies of Central America, the AGOA countries, Pakistan, Sri Lanka, Indonesia and Jordan as particularly vulnerable once safeguards are removed.

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National Council of Textile Organizations

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