Chinese currency appreciation and the meltdown of the US economy have influenced the Chinese textile exporters puttingthem into uncertainness. China has witnessed increasing costs during therecent past like Yuan appreciation, export tax rebates, and increasing laborand raw material costs. Many Chinese exporters expected to shift the increasedcosts to their buyers. But the financial turmoil in US is currently forcingthem to compromise with lower prices in order to attract adequate orders andsustain themselves in the US market.
The China Syndrome:
After the 2008 Beijing Olympics successfullyconducted in China, what should have been a triumphant year in its historyactually turned out to be a period of factory shut downs, and decline in itstextile exports. Instead of basking in the spotlight of its Olympic torch, China unleashed greater instability on global markets. Temporary quotas imposed by US endedup globally during 2005. China, being the worlds largest exporter of textilerequested the EU and US to extend the quota till the end of 2008. Now as theend of 2008 is nearing, Chinese textile exporters are feeling pessimistic aboutthe textile market in US in 2009, despite the fact that the year is quota free forexports to US. Textile industry in US is being squeezed by the economic predicaments caused by housing market debacle, credit crunch, and rising commodity prices. Hence they might oblige the Government to make proceedings to protect their interests. Inthis regards, the House Ways and Means Committee has formally requested theInternational Trade Commission (ITC) to provide information about the Chinesetextile imports which will be helpful in framing new import quotas.
Some analysts believe that the Governmenthas taken initiatives to stimulate the economy to tackle the financial turmoil,and that the consumer market is going to recover during the third quarter ofthis year. On the contrary, a few others state that, the recession will lastupto the first half of the next year and may not have a recovery until the endof 2009.
Certain principles regulate thefunctioning of international treaties in US and EU. Textile industry in US maypetition duties for Chinese exports if:
- The concerned industry can show that its business is damaged for at least a quarter.
- The affected industry is making the request.
- A long and time consuming procedure is gone through in the petitioning process.
- The industry filing the petition should prove that unfair practices have caused the damage.
US customers also feel the price hike in Chinese garments by 15 - 25%. Due to this, textile exports from China have been decreasing during the past 5 months. The increase of the Chinese Yuan by18% against the US dollar was also supplementary to the decline in the exportfigures. This has made many Chinese textile exporters to seek for options inthe markets of other countries including the EU and South America.
The US meltdown, and banks filingfor bankruptcy has caused a drastic change in the financial landscape;globally. Textile businessmen; worldwide are still waiting with uncertainty,what the blizzard would bring into their business.
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