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Is China's Trade a Threat?

Do you own blue jeans? If you do, they probably were not made in the United States. It is more likely that they were manufactured in China. You may own a shirt that has a “Made in China” tag on it, too.

In 2005, more Chinese-made textiles, such as shirts, underwear, and pants, were exported to the United States and Europe than ever before. This worried some people and government leaders. They feared that the importation of inexpensive Chinese-made clothes would hurt textile manufacturers in the United States and Europe. The production costs in those places are much higher than they are in China.

Limits on Trade

The number of textiles shipped from China increased when worldwide quotas, or limits, on some Chinese exports ended on January 1, 2005. This allowed China to export larger quantities of cotton shirts and denim.

Background on Quotas

When it joined the World Trade Organization (WTO) in 2001, China agreed to accept quotas on the quantity of textiles it could export to other countries in the WTO through December 31, 2004.

As part of the agreement, the quotas were eliminated on January 1, 2005. However, when China joined the WTO, it also agreed to let other countries renew restrictions on Chinese clothing and textile imports through 2008 if a sudden increase in shipments from China threatened their economies.

The expiration of the quotas caused a rapid increase in the number of Chinese textiles shipped to the United States and Europe. According to figures from the U.S. Census Bureau, the United States imported $2.07 billion worth of Chinese fabric, clothes, and hats in February 2005. In Europe, some Chinese textile imports increased more than 500 percent in the first four months of 2005, according to European Union statistics. The European Union (EU) is an economic and trade association made up of more than two dozen European countries.

Slowing It Down

In 2005, some voiced concern that rapid importation would cause the economies of Europe, the United States, and other countries to suffer. For example, some economic experts said that 665,000 textile and clothing manufacturing jobs in the United States could be lost because workers in the United States are paid more money than those in China. In addition, some trade experts said that China could force smaller countries, such as Indonesia, Bangladesh, Pakistan, the Philippines, and Cambodia, out of the textile business.

The United States and the European Union responded to these concerns by imposing new quotas on some textile products from China. U.S. and EU citizens hope the quotas will keep textile-manufacturing jobs in their own countries. However, the restrictions allow a gradual increase in imports every year.

Some experts fear that U.S. and EU limits could cause other countries to impose limits as well. This could have a negative effect on the global economy.

Opposition

For its part, the Chinese government opposed the new quotas, saying that relations between China and countries imposing limits would be damaged.

The Chinese have found some support in the United States. Some U.S. retailers have warned that quotas on China's textiles will mean higher clothing prices for consumers.