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CHINA TRACKING ANALYSIS                                                  Updated:  Mar 2006

 

This analysis tracks imports of apparel from China over the past several years in order to help determine the impact that the removal of quotas will have on the US industry as well as other textile and apparel sectors around the world.  Under current WTO rules, these remaining quotas, which were agreed to by China in late 2005, must be removed on January 1st 2009.   A number of international trade groups, including NCTO, are pushing for these safeguards to be extended as part of the Doha Round of trade talks.

 

1) Imports where China has been quota free for more than three years – China’s market share hits 70% in latest month.

 

Chinese market share in apparel categories that have been removed from quotas for more than three years reached 70.4 percent in 2005 (latest trade figures) with the next largest supplier, Thailand, at 2.2 percent. 

 

Since 2002, imports from China have increased by 1.9 billion square meters while imports from the rest of world have declined by 371 million square meters.  Every major exporter except one – Vietnam – has seen major volume and market share declines since quotas were removed on China.  The biggest losses have come from the countries of the Caribbean Basin, Mexico, Thailand, Bangladesh, the Philippines and Pakistan.  For country specific information on market share changes by dollars and square meters, click here.

 

First Quota Removal:  2002

Market Share

With quotas in place (2001)

With Quotas Removed

After one year

After 3+ years (Dec. 2005)

China market share

21%

38%

66.6%

Rest of world market share

79%

62%

33.4%

Volume (sme)

2001

YE 12/2005

Change in sme (2001-YE Dec 05)

Percentage Change

Chinese exports to US

354,976,057

1,890,448,299

1,535,472,242

433%

Rest of world exports to US

1,321,185,330

949,823,801

-371,361,529

-28%

 

2) Imports where China has been quota-free for about one year – China’s market share increases from 16 to 38 percent.

 

Chinese market share in apparel categories removed from quota on January 1, 2005 increased from 16 percent to 39 percent in 2005, almost exactly the same rate of increase which China showed in the 2002 quota removal above. 

 

Volumes however are much larger than in 2002, owing to the larger number of quotas removed.  Chinese exports to the United in these categories increased by 1.5 billion square meters in just eleven months while imports from the rest of the world fell by 601 million meters.  At China’s current rate of growth, China will take 60 percent of the import market by January 2007 and 70% by June 2007.  For country specific information on market share changes by dollars and square meters, click here.

 

The biggest losses have come from the Caribbean Basin, Thailand, Mexico, South Korea, Turkey, the Philippines, Cambodia and Sub-Saharan Africa.   Bangladesh, Pakistan and Vietnam have shown gains, though these pale beside those accomplished by China (approximately one fifteenth as large).

Second Quota Removal:  2005

Market Share

With quotas in place (2004)

With Quotas Removed

After one year

After two years (proj)*

After three years (proj)*

China market share

16%

39%

62%

70%

Rest of world market share

84%

61%

38%

30%

Volume

2004

YE 12/2005

Change in sme (2004-YE Dec 05)

Percentage Change

Chinese exports to US

771,000,953

2,248,978,445

1,477,977,492

192%

Rest of world exports to US

4,180,384,333

3,579,867,179

-600,517,154

-14%

*Projected based on current Chinese import rates of increase

3) Imports where new quotas were reapplied in 2005.

 

This group of quota controlled apparel products is “the motherlode” of apparel trade, consisting of such major consumer products as trousers, shirts (knit and woven) and underwear, among others.  In size, it accounts for nearly 60 percent of all apparel imports trade. 

 

As quota were removed on January 1st, Chinese market share rose as swiftly as in the previous two quota releases but the imposition of quotas meant caused China’s share to peak before mid year.  As a result, by the end of the year, China had taken only 13% of the US market as compared to 38% during the previous quota releases. 

Still, China’s relatively brief window of opportunity still enabled China to grow by nearly one billion square meters while other suppliers fell by nearly one hundred million square meters.  China’s share increased from 5.4% to 13%.  For country specific information on market share changes by volume and dollars, click here.

 

Losses by the rest of the world were limited by the safeguard actions.  The biggest hits being taken by Mexico, South Korea, Taiwan, Turkey and Sub-Saharan Africa.  A number of other countries also saw increases after China was restrained, including the countries of the Caribbean, Bangladesh, Cambodia, Sri Lanka, Pakistan and Jordan.

 

Safeguards Applied after Quotas Initially Removed - 2005

Market Share

With quotas in place (2004)

New Quotas/Safeguards Reapplied in May 2005

After one year

After two years (proj)*

After three years (proj)*

China market share

5%

13%

14.0%

15.4%

Rest of world market share

95%

87%

86%

85%

Volume

2004

YE 12/2005

Change in sme (2004-YE Dec 05)

Percentage Change

Chinese exports to US

612,292,073

1,547,952,623

935,660,550

153%

Rest of world exports to US

10,670,583,714

10,613,289,986

-57,293,728

-1%

*Projected based on current Chinese import rates of increase

 

4) Chinese exports show sharp price drops after quotas are removed – average 34%

 

Each time quotas have been removed, the prices of Chinese exports have dropped sharply, an average of 34%.  Prices from the rest of the world’s suppliers have not dropped, and so China has been able to aggressively increase its market share.  China can afford to drop its prices to whatever level it is necessary to get the sale because of the enormous subsidies supplied by the Chinese government.

 

China Prices Versus Rest of World Prices

1. Quota free for China Since 2002

2001

2002

2003

2004

YTD 12/2005

Change (2001-2005)

China Price Vs. Aver. World Price

Average Chinese Prices

$7.29

$4.48

$3.50

$3.35

$3.28

-55%

-13.0%

Average Rest of World Prices

$3.61

$3.41

$3.49

$3.55

$3.77

4%

2. Quota free for China in 2005

2001

2002

2003

2004

YTD 12/2005

Change (2004-2005)

China Price Vs. Aver. World Price

Average Chinese Prices

$4.63

$3.72

$3.53

$3.42

$2.78

-18%

-7.5%

Average Rest of World Prices

$3.20

$2.96

$2.93

$3.07

$3.01

-2%

Categories Where Safeguards Imposed

2001

2002

2003

2004

YTD 12/2005

Change (2004-2005)

China Price Vs. Aver. World Price

Average Chinese Prices

$5.34

$5.19

$4.88

$4.76

$3.27

-31%

-11.3%

Average Rest of World Prices

$3.83

$3.68

$3.65

$3.67

$3.69

0%

China Quota Free:  All Groups (1+2+3)

Pre-Quota Removal