01/11/2005, 00.00
CHINA
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Unemployment rises in Asia as Chinese garment exports grow

by Maurizio DOrlando
An end to Chinese export quotas will have negative repercussions on the world's major garment manufacturers, starting with those in Asia.

Milan (AsiaNews) – China's decision to impose levies on its garment exports has not allayed the fears created by the abolition of export quotas. Many still expect that without the textile quota system hundreds of thousands of jobs will be lost not only in Asia's poorest countries but also in the rest of the world.

Garment factories are already moving to India but especially to China, no longer constrained by import quotas imposed by the United States and other large textile markets.

The fear is palpable in places like Cambodia and Bangladesh, where many Hong Kong or Chinese textile firms had set up factories in recent years to ensure that a part of their production escaped the quotas now abolished.

Cambodia will be one of the hardest hit countries—textiles represent 64 per cent of its exports to the US and 25 per cent to Europe in 2003. According to official government figures, garment exports totalled US$ 1.6 billion or 94 per cent of the country's export and 40 of its GDP employing some 240,000 workers, mostly women.

There is no other country in the world that depends so much on the export of a single good, bar some exporters of raw materials.

The World Trade Organisation expects the share of Chinese garment imports to jump from 18 to 29 per cent in the European Union and from 16 to 50 in the US.

McKinsey, a US consultancy firm, projects that the rest of Asia outside China would see its share of the world textile trade fall to 20.1 per cent in 2008 from 31.9 per cent in 2000, whilst the rest of the world excluding China would suffer an even bigger drop from 45.7 per cent in 2000 to 29.4 per cent in 2008, projected

Bangladesh, Cambodia and Pakistan are the most vulnerable to the end of textile quotas, according to the International Monetary Fund. In all three, the garment industry accounts for more than 70 per cent of their exports. Pakistan though might be in better position because it has its own cotton industry. Mauritius, Sri Lanka and Tunisia are also vulnerable.

In 2002, Bangladesh's textile and garment exports were valued at US$ 1.8 billion. The industry as a whole employs about 1.8 million people in a country of 140 million.

Because Bangladesh manufactures garments using Indian cotton only because of quotas, when they go, it is going to make little sense to remain in the country, already plagued by weak a national infrastructure, since it will be cheaper to do the same in India.

The IMF expects that Bangladesh's exports could fall substantially, cutting total employment by 7.7 per cent, textile and clothing exports by 29.5 per cent and the GDP by 4.1 per cent.

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