China became a member of the WTO on December 11, 2001, after 15 years of hard negotiations. At that point, people were convinced that China’s textile industry would benefit the most from the accession.
They are not disappointed. In the ten yeas since China’s entry into the WTO, Chinese textile and clothes exports have maintained double-digit growth, taking now about a third of the world market for textiles and clothes. China has become the world’s largest textile and garment exporting nation (See the chart: Value of Chinese textile and garment exports from 2000 to 2010).
It is fair to say that the textile and clothes is one of the industries that have seen the fastest progress and benefited the most since the nation’s entry into the WTO.
According to relevant statistics for 2010, China processed 41.3 million tons of textiles. Its textile enterprises above the designated size produced 27.2 million tons of yarn and 77 billion meters of cloth, realizing a total of 4.7 trillion yuan in industrial output value, 1.28 trillion yuan in added value, and US$2.0605 trillion in export value. The profit has also increased at a much higher speed. Over 20 million people were working in this industry.
China has been a large textile producer and exporter, with textile and clothes industry playing an important role in its economy. Textile is a labor- intensive, manufacturing industry which creates nearly 100 million direct and indirect jobs, the most among all industries.
China’s entry into the WTO brings challenges as well as opportunities to its textile industry. Chinese textile exports saw rapid growth for a short period of time following the abolishment of all quotas in 2005, before foreign nations resumed their quota systems against China, causing new trade frictions.
In particular, trade protectionism has been rising since the outbreak of the international financial crisis. China is the main victim of trade protectionism. Besides European and North American countries, Turkey, Brazil, Peru, Colombia, South Africa and many other developing countries have also made frequent avail of various kinds of trade remedies to restrict China’s textile and garment export
A review of the development of Chinese textile industry in the past decade makes us feel that the achievements did not come easily.
Impressive performance in the U.S. market
In 2002, China’s first year in the WTO, its textile industry reported record highs in terms of output value, profit, and exports volume.
In the first eight months of 2002, the value of U.S. imports of Chinese textiles increased at a much higher rate than the same period a year ago. In contrast, U.S. textile trade with other major trading partners saw different degrees of decline.
This suggested that in the context of WTO, Chinese textiles’ advantages of low price and good quality were fully demonstrated. The U.S. market began to favor Chinese textiles.
In the first eight months of 2002, Chinese textiles accounted for 12% of U.S. textile imports, a little higher than the Republic of Korea, even with Mexico, lower than Caribbean countries.
In 2009, China became the largest textile supplier of the United States, accounting for 39.2% of its textile imports.
China’s entry into the WTO has reduced the purchasing cost of the United States and also the cost of Chinese textiles enterprises to export their products to the United States.
Soaring Chinese exports caused panic in the EU
According to the Agreement on Textile and Clothes, textile and clothes quotas shall be abolished among WTO members by four phases starting 1995. The 40-year-old textile and garment trade quota system came to an end on January 1, 2005.
According to relevant statistics for 2005, the first year after the abolishment of the quota system, the Chinese textile industry reported higher growth rate, and all economic index saw re-

cord highs. Chinese textile and clothes exports reached US$115.03 billion, an increase of 20.9%. Specifically, exports to the United States were US$18.64 billion, an increase of 70.5% and accounting for 16.2% percent of China’s total textile and garment exports of the year; exports to the EU were US$ 18.32 billion, an increase of 56.9% and accounting for 15.9% percent of the nation’s total exports. By the end of 2005, the United States and the European Union surpassed Japan and Hong Kong as China’s largest and second-largest export markets of textiles and clothes.
This caused panic in the European textile industry, which strongly urged the European Commission to place restrictions on some of Chinese textiles. A trade war broke out.
The European Union disclosed on February 23, 2005 that it might adopt Special Safeguard Mechanism against Chinese textile exports. A series of investigations over Chinese textile products were conducted, escalating trade disputes between China and the EU. In order to prevent the friction from further escalating, EU Trade Commissioner Mandelson arrived in Shanghai on June 10 for consultation over this matter with the then Chinese Commerce Minister Bo Xilai.
An agreement was reached that China shall ensure a smooth transition of growth in Chinese textile exports to Europe; the EU shall scrap restrictions on Chinese exports in 2008 and set growth limits on only ten categories of Chinese textiles before the end of 2007.
In the next few years, China and the EU had frequent trade frictions and disputes over trade quotas. Quite a number of senior leadership meetings were held to resolve the disputes. The two sides finally reached an agreement that the EU shall fully open its textile and clothes market to China starting January 1, 2008. After 3 years of efforts, the Chinese and the EU textile industry finally entered into a quota-free era.
As agreed in 2001 before China joined the WTO negotiations, the United States was allowed to place quota restrictions on Chinese products before 2008, so as to avoid a soaring increase in Chinese textile exports to the United States. That means from January 1, 2005 to December 31, 2008, foreign nations still had the right to impose special safeguard measures on Chinese textiles when they deem Chinese textile exports have disrupted their markets.
Face square anti-dumping measures and technical barriers
With the phasing out of quotas following China’s entry into the WTO, China’s textile and clothes industry reached its full potential for output and export, and had stronger advantages over its competitors. In 2003, China’s textile and clothes exports stood at US$78.85 billion, an increase of 27.7%, accounting for 20% of the U.S. imports of the category and 15% of the EU imports. The Chinese authorities expected the proportions to rise to 50% and 30% respectively in 2005 when the quotas shall be eliminated. Chinese textile industry made massive expansion in 2004, with actual investment in the first quarter at 10.319 billion yuan, an increase of 100.7% year on year.
However, Chinese textile industry didn’t expect the wave of anti-dumping investigations and technical barriers coming with the trade liberalization.
In June 2006, 3 U.S. polyester staple fiber manufacturers submitted an indictment to the U.S. International Trade Commission and Commerce Department, accusing Chinese products of 88.15% to 109.67% dumping in the United States and causing material injury or threat of material injury to its domestic industry. They requested for anti-dumping investigations into some of the polyester staple fiber from China and imposition of 101.52% of average anti-dumping duties.
In July the same year, the Commerce Department of the United States conducted anti-dumping investigations into Chinese polyester staple fiber, involving exports value of around US$65 million and nearly a hundred Chinese enterprises mainly in Zhejiang and Jiangsu provinces. Among them, Ningbo Dafa Chemical Fiber, Yuanfang Shanghai and three other top 5 enterprises accounted for 59.54% of China’s total polyester staple fiber to the United States.

According U.S. practices, sued Chinese enterprises had to face the lawsuit or suffer a 101.52% maximum tariff.
In the same month Chinese enterprises were indicted, China Chamber of Commerce for Imports & Exports of Textile gathered over 20 enterprises in Ningbo, Zhejiang Province to prepare for the defense.
On May 15, 2007, the International Trade Commission of the United States made anti-dumping industry injury ruling against polyester staple fibers originating from China. The duty rate for Chinese exporters was 44.3%.
Similarly, being quota-free does not mean smooth trade relations between China and the European Union. The EU has never stopped anti-dumping and technical trade barriers against Chinese textile products since 2008. The European Parliament passed not long ago the second reading of the EU Textile Mark of Origin Agreement, a compulsory legislation setting up a new barrier to textile exports to the EU.
A large proportion of international trade remedy cases involving China in the past decade are about textiles and clothes, which are China’s major exports. According to the Report on the Investment Analysis and Prospect Forecast of China’s Chemical Fiber Industry from 2010 to 2015 published by China Investment Consulting, foreign nations took 55 special safeguard measures against Chinese textiles from 2001 to 2008. According to the statistics of the Ministry of Commerce of China, the number of trade protectionism cases against Chinese textile and clothes reached a re- cord high of 45 in 2009, involving such products as chemical fiber, staple fiber, curtain, woven tape, electric blanket, curtain cloth, cotton yarn, linen, flax and narrow loom.
Trade protection measures can be divided into two categories: legal and technical. legal trade protection measures mainly include anti-dumping, anti-subsidy and special safeguard measures. In recent years legal trade protection measures have become commonplace, and come more and more often from developing nations such as India and Pakistan.
Technical trade protection measures are often taken by developed economies such as the United States, Japan, the EU and Canada. Developed economies have sound standard system and testing organizations. To prevent the impact of Chinese textile and clothes on their domestic markets, they have promulgated and updated a number of new laws and provisions, such as the REACH regulation, banned azo dyes, textiles eco-labeling criteria and OekoTex100 certification standards.
Seek growth amidst frictions and dialogue
In the past decade of frequent trade frictions and dialogues, Chinese textile industry has transitioned from silent production to active communication. In the process of defense and counter-claim, Chinese textile enterprises have not only had better knowledge of WTO rules, but also enhanced communication and understanding with their trading partners.
In the ten years since China joined the WTO, Chinese textile enterprises have actively changed their pattern of development, strengthened their capacity to operate internationally and to deal with international trade friction, and made remarkable progress. China National Textile and Apparel Council has conducted “industrial diplomacy” by promoting exchange, dialogue and cooperation between Chinese textile industry and their counterparts in the world. The council also urges enterprises to shoulder social responsibility, so as to enhance the competitiveness of the industry and set a good international image.
The past decade saw the fastest and best development of China. During this period, the nation’s textile and garment industry witnessed rapid growth, with more integrated industrial chain, stronger production and export capability and increasingly bigger share of the international market. Chinese textile exports have entered into a period of steady increase after the period of fast increase following the elimination of quotas. Chinese textile enterprises’ capability of innovation and their product quality have been greatly improved, reversing the situation of mere increase in export volume.
Due to rising costs of labor, raw material and energy, and the impact of trade uncertainties at home and abroad, the Chinese textile and garment industry’s era of low cost and high growth is fading away. In face of fierce market competition, Chinese textile enterprises have changed their pattern of development, accelerated the adjustment of their industrial, market and product structures, continuously improved their capabilities of research, development, innovation, design, branding, marketing and management, thus upgraded the international status of Chinese textiles and clothes.
“Only by increasing the contribution rates of science & technology and brands, can we withstand various unfavorable situations. The textile industry in the future should be driven by innovation, and seize the strategic opportunity to go from big to strong,” said Du Yuzhou, President of China National Textile and Apparel Council.