T-SHIRT.gifWant to know why China's textile industry is so successful? Read this unusually frank interview with the charge d'affaires at China's embassy in South Africa.

China
has been exporting textiles a long time — Chinese silk was a big
favourite with Egyptian aristocrats 2000 years ago. It also has
abundant supply of cheap labour. But its current competitive strength
stems from the 15 years China spent restructuring its textile industry
in the run-up to WTO accession in 2002.

Prior to that, China's
textile factories were using obsolete looms made in the 1920s and
1930s. With the WTO beckoning, Chinese government “made a decisive
decision” to rejuvenate its industry.

The first move was to
shift from extensive to intensive operation. That meant decreasing the
number of spindles, reducing the number of employees and investing in
the most productive enterprises.

The second move was to
encourage home-grown innovation using Chinese scientists and
technicians. The third measure was to import foreign technologies and
technical know-how when needed. This continues to this day — China has
spent $18.8bn on importing advanced textile manufacturing equipment in
the past five years. The official, using an unfortunate analogy, calls
this process “blood transfusion”.

The final step has been to encourage foreign investment in China's textile sector.

“If
you do not have necessary funds to import foreign technology and
equipment, you can attract foreign investment to do so. This is a
win-win situation. You can keep as many workers as possible in the
industry while foreign investors get their due profits. We call this
'going to the high sea by borrowing ships'”.

And
China's textile industry certainly has taken to the high seas in a big
way. So much so, in fact, that the European Union last year had to impose limits
on the growth of Chinese textile exports to the EU in ten “categories
of concern”, including bras, t-shirts and men's trousers. Exports
soared after the abolition of EU quotas on Chinese textiles in January
2005.

Textile workers in South Africa fear a similar avalanche
of cheap “Made in China” t-shirts if a proposed Free Trade Agreement
between SA and China goes ahead.

SA's trade relationship with China is characterised
by garments and textiles. Since 2003, SA has seen a 480% increase in
clothing imports from China. In the same period, its textile industry has lost 62,000 jobs.

The
textiles problem threatened to become a real deal-breaker block in the
FTA negotiations, so China has now proposed to voluntarily limit
exports and provide training for local personnel to improve the
competitiveness of SA's domestic industry.

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