Global Quota System and China＇s Textile and Clothing Industry

I. Introduction As a developing country, textile and clothing goods remain one of the most important sources of China’s exports since the opening up to the outside world and economic reform at the end of the 1970s. The contribution of textile and clothing exports to China’s total exports hit its record in the middle of the 1980s. In 1987, the share of these two types of goods in China’s total exports was 31.13 percent. From 1986 to 1995, their share in China’s exports was more than 30 pe…

Global Quota System and China''s Textile and Clothing Industry

By the middle of 2005, many Chinese textile and clothing enterprises were unable to continue business. Because of the safeguard actions invoked by WTO member countries, especially the USA, the EU and some developing countries, such as Turkey and Mexico, a stable and predictable overseas market no longer exists for export‐oriented Chinese firms. It had actually been predicted that China would be the big winner after the elimination of the global quota system on 1 January 2005. What has happened to China's textile and clothing industries? What are the prospects for them over the next few years? Using a partial equilibrium analysis framework, this paper finds that China was the big loser under the quota system before 2005, and that China will be the big loser once again after the ending of that system. (Edited by Xinyu Fan)