Limitations ordered by the U.S. over textile exports of China within the first half of 2006 has benefited other countries with active textile exporters. The U.S., as the world’s biggest trading economy, began importing its textile needs from other exporters. The Indian textile industry is among the major textile exporters to benefit from these restrictions judging from the increase of its profits in the U.S. Although China is fast becoming another economic giant, its administrative body cautioned its own textile export industry of possible decrease or growth slow down for the rest of 2006.
The Chinese export industry reportedly generated a meager $8.23 billion in sales of textile exports for the months of January to July. This is a decrease of 76 percent compared to the textile sales posted last year. The year 2006 is marked as the only year when the Chinese textile exporters suffered this much loss. The Communist country attributed these losses to the U.S.-imposed restrictions. Conversely, Indian exports reportedly registered an increase of 18 percent within the same time period.
It can be recalled that Indian Textile Minister Sankersinh Vaghela has expressed optimism about the chances of his country’s textile exporters against indomitable competitors like China. Vaghela had clearly foreseen the effects of the U.S. restrictions on one of his country’s main rivals in the textile industry. With its improving textile economy, India has projected plans to exceed the set fiscal target of 19.7 billion for the fiscal year 2006 to 2007. This is an increase of more than two billion in profits. The bulk of this excess is credited to Indian textile industry which is projected to reach the $40 billion mark by 2010. Plans to upgrade the country’s manufacturing community through building integrated textile manufacturing parks are underway with a projected budget of Rs.1.4 trillion.
The restrictions imposed on China’s clothing industry were founded over concerns by the E.U. and the U.S. that Chinese exporters may stifle competition in the textile industry. China has been accused of unfair trade practices because of its tendency to swamp markets with cheap clothing and surplus textile products. This behavior of the Chinese textile industry was traced to the lifting of the quota system, which limits global textile sales of countries. The lifting of the quota system was soon followed by an unprecedented increase in Chinese global textile exports. By imposing the restrictions, the U.S. economy is attempting to prevent the advance of a new world capitalist. By limiting China’s access to the U.S. market, China’s capitalist streak is controlled.
China has sought a compromise with the two capitalist powers and both has already reached agreements with China and its exporters regarding the issue. The U.S. signed a trade agreement with the Communist nation that will hopefully help resolve the dispute. This agreement, which allows Chinese clothing exporters a rise of an initial 8-10% this year, will undoubtedly have an effect on India’s own clothing exports. This is a development that the Indian nation should closely monitor.