WASHINGTON — China is muscling out the competition.
In the second quarter China overtook Mexico as the number-one supplier of textiles and apparel to the U.S., and for the first half of the year China surpassed Canada as the number-two supplier of textile and apparel imports, a Commerce Department report revealed Tuesday.
This story first appeared in the August 21, 2002 issue of WWD. Subscribe Today.
On an annual basis, however, Mexico and Canada remain the number-one and number-two suppliers to the U.S., respectively. But at the rate China is growing, it could easily grab the top spot by the end of the year, according to Donald Foote, director of the agreements division at Commerce’s Office of Textiles and Apparel.
In the second quarter, apparel and textile imports from China surged 123.5 percent to 1.17 billion square meters equivalent, according to Commerce data. In the first half, imports from China rose 86.8 percent.
China’s growth fueled overall apparel and textile imports, which increased to a record high in June by 16.2 percent to 3.27 billion SME. Textile imports, which mushroomed 30.2 percent, continued to be the driving force, while apparel imports edged up 1.7 percent.
In the second quarter, imports rose 15.5 percent to 9.3 billion SME, returning to double-digit growth for the first time since the third quarter of 2000, according to Foote.
“The contrast between the first and second quarters is stunning, as textile import growth went from 10 percent to 27 percent and apparel imports turned from a 6 percent decline to a 2 percent increase,” said Foote.
He said China accounted for almost 40 percent of the second-quarter upturn in textile imports, while nine other countries — Pakistan, India, Mexico, Canada, Vietnam, Indonesia, South Korea, Honduras and the Dominican Republic — covered almost 50 percent of the increase.
China has continued to consume market share in several categories in which quotas were lifted on Jan. 1. They include: man-made fiber sheets, blankets and curtains, cotton towels, handbags and travel-sports bags, non-woven fabric, coated fabric and tire cord, knit fabric and man-made fiber textured yarn, which recorded 82 percent of first half’s import growth, according to Foote.
“Even in apparel imports, the absence of quotas is having an impact,” said Foote.
China, Vietnam and India accounted for all of the apparel increase during the second quarter, he said. China’s largest growth items were cotton headwear and infants’ clothing, while Vietnam’s was man-made fiber headwear.
“It’s not a great surprise, but it is an astonishing increase nonetheless,” said Cass Johnson, associate vice president of international trade at the American Textile Manufacturers Institute. “China is advancing at everyone else’s expense.”
Natalie Hanson, director of trade policy at International Development Systems, said the 12-month data paints a more accurate picture. For the year ending June 30, Mexico’s market share of apparel imports was still twice that of China’s, and in textiles China was still the number-four supplier behind Canada, Mexico and Pakistan.
Hanson also noted that China is close to filling several categories still controlled by quotas, including cotton sateen, as well as cotton sheets, pillowcases and bed linens, which will temper its growth in other categories on an annual basis.
These new numbers have many industry observers anxiously awaiting what, if anything, the U.S. will do to control trade. Foote declined to comment on whether his office has made a recommendation to the Committee for the Implementation of Textile Agreements to place quotas on certain import categories from China. He noted the textile industry has not petitioned CITA to make a quota call on imports from China.
According to China’s World Trade Organization entry agreement, the U.S. or any other WTO member under the textile-specific safeguard could unilaterally reimpose quotas on Chinese apparel and textile import categories for one year through 2008.
Quotas on all textile and apparel imports from 144 WTO nations will removed by Dec. 31, 2004, which was determined in 1994 during the Uruguay Round of negotiations.
“Clearly, the government needs to use the safeguard when these kinds of surges are occurring,” said Johnson. “The big question it has to answer is whether China is merely displacing other countries or displacing domestic manufacturers.”
He said China is becoming a big supplier of knit fabrics, yarns, dressing gowns and man-made fiber apparel — all categories that are produced in the U.S.
In the case of Vietnam, domestic textile executives are waiting for negotiations for a bilateral textile and apparel pact to begin. Importers oppose imposing quotas so early without allowing Vietnam to build its trade base.