| |
China slows growth of textile exports |
|
2005-6-28
China''s agreement to restrict growth in textile exports to head off threats of quotas by the United States and the European Union may make the industry more competitive by driving smaller factories out of business.
China''s textile makers, which invested US$25 billion in two years to expand, will need to apply for export licences as the government tries to rein in growth in an industry, worth more than US$100 billion a year, China''s Commerce Ministry said on June 20.
"China may, through this trade agreement, allow bigger companies to export more to encourage the competitive ones," Jiang Guiping, a cotton analyst with China International Futures Co, the country''s biggest futures brokerage, said in a telephone interview from Shenzhen.
"There will be companies forced out of business after rapid expansion in the last few years."
The textile industry in China employs 19 million people, about the size of the population of Australia, and jobs will be lost because of the restrictions, the government said. Commerce Minister Bo Xilai on May 30 said US restrictions on seven textile products may cost China US$2 billion of exports and 160,000 jobs.
China''s fixed-asset investment in the textile industry rose 30 per cent last year, from a year earlier, to 117.9 billion yuan (US$14.2 billion) from 90.7 billion yuan. In 2003, investment surged 73 per cent, indicates the government-owned China Textile News industry newspaper.
Companies had invested to prepare for the January 1 removal of a global textile tariff system set up under the World Trade Organization.
Losing out Youngor Group Co, China''s biggest maker of men''s suits and shirts and a supplier to Marks & Spencer Group Plc and Polo Ralph Lauren Corp, said on June 9 it is losing orders to rivals in India.
"Our development is affected, the impact is very big," Li Rucheng, chairman of Youngor Group said in Ningbo on June 8. Youngor invested 2.5 billion yuan over the past five years to expand capacity, he said.
Cotton spinner Wuhan Yudahua Group Co has cut its stockpile to less than two months'' worth of the fibre, compared with the industry standard of three months.
Millers are cutting inventories, when they usually buy cotton to last through the year, Ho Kin, director of Hong Kong- based Zhongxing Cotton Ltd said on June 16.
Zhongxin sells about 200,000 metric tons of cotton to Chinese customers a year, sourcing from the United States, West Africa and Uzbekistan. Zhongxing also represents Cargill Cotton.
"Mills are very hesitant to extend their coverage because they don''t know what''s going to happen," Ho says.
Wuhan Yudahua, which has more than 3,000 workers spinning more than 15,000 metric tons of yarn and thread annually, keeps stocks of the fibre low "to cut costs," Zhou Yongjie, trade manager, said in a telephone interview from Wuhan.
Consumption of cotton "will be moderated," Jeff Coey, director of China and Southeast Asia at Cotton Council International, said in an interview on May 31. Cotton Council is the international division of the Memphis-based National Cotton Council of America.
Cotton prices on the New York Board of Trade dropped 5.3 per cent in the past 12 months, indicate Bloomberg data.
Cotton crop
Millers may start to replenish cotton stocks on the prospect a smaller crop this year may raise prices for the fibre harvested in October, Jiang, with China International Futures, says.
China''s cotton imports were down 56 per cent, compared with the year-earlier period, in the first four months, indicate customs data.
"Anecdotal evidence and mill surveys suggest, on average, mills operate with about one month stocks, and are buying hand-to-mouth," Gerald Estur, statistician at the Washington D.C.-based International Cotton Advisory Committee said in an e-mailed response.
Textile makers account for nearly all of China''s cotton demand, according to Beijing Orient Agribusiness Consultant Ltd.
Cotton production this year is forecast at 5.5 million tons, 13 per cent less than last year, the US Foreign Agricultural Service said in an April 26 report said.
"The small and medium-sized manufacturers may have to shut if their products don''t get the export quotas," says Wang Jianhong, vice-secretary-general of the state-backed China Cotton Association in Beijing.
Chinese manufacturers have to move to so-called higher value-added products from "merely sticking other people''s brands on our own products," he says.
Source:China Daily
|
|
|
|
|
浙公网安33010602010414
