MANILA, Oct 11: Fears that China would swallow up between a third and 50 per cent of all world textile trade with the end of a global export quota system earlier this year have not materialized, the International Labour Organization (ILO) said in a report on Tuesday.

On January 1, all quotas on textiles and clothing exports came to an end, sparking fears that China would flood the market, undercutting competitors in Europe, the United States and crucially, many parts of the developing world.

In the event, however, Asia’s textile exporting countries are coping better than first expected and forecasts of a labour and trade catastrophe have not panned out, with several factors limiting the damage.

Among them are the safeguards importing countries can invoke should China’s export growth “create serious market disruption”, the report said.

Another fact is that “China is in the process of outgrowing its comparative advantage for the most labour-intensive manufacturing industries, and textile and clothing’s share of employment and GDP is on a declining trend.

“It is evolving towards higher value-added industries. China is developing not only as a manufacturing hub but also as an important consumer market which is likely to absorb a much larger share of its own production, as well as total world imports,” the report said.

In 2003, China accounted for 20 per cent of total world textile exports and 28 per cent for clothing.

The report, “Promoting Fair Globalization in Textiles and Clothing in a Post-MFA Environment,” has been prepared for a meeting later this month in Geneva on the social and economic impact of the ending of the Multi-Fibre Arrangement (MFA).

In Asia, the countries predicted to be the main beneficiaries of the post-MFA trading environment were those that had suffered most earlier under its restrictions — Pakistan, India and particularly China, the report said.—AFP