LAHORE, Aug 3: Pakistan’s textile industry that accounts for 60 per cent of the country’s total exports hopes to gain from China’s recent re-evaluation of its currency, yuan.

“Well, yes, the Chinese currency’s appreciation would help our exports. However, we do not expect 2-2.5 per cent appreciation in the value of yuan to cause a big change in the overall situation, or dent China’s present position as the largest exporter of the textile products,” the knitwear and woven garments exporters told Dawn on Wednesday.

China abandoned its currency’s peg against the dollar a couple of weeks back to satisfy major importers of its textile products, especially the US. The US has also invoked trade safeguards under the WTO regime to protect its own textile industry.

“It will make an impact on our exports, but greater difference would be made by invocation (for three years) of trade safeguards by the US against the Chinese textile products,” M.I. Khurrum, a leading knitwear exporter, said.

“Even after re-evaluation of yuan, the Chinese products remain far cheaper than us. Hence, we must not expect a big difference,” said former Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) chairman Pervaiz Hanif.

“The Chinese government has been very careful in re-evaluating its currency. It will not push up the cost of living. Their input cost will not go up much due to paltry re-evaluation of yuan. But it is a positive step, and we are expecting further re-evaluation as the current change won’t satisfy the Americans. Their products will become costlier if yuan keeps appreciating,” he said.

Mr Khurrum said China was 20 per cent cheaper than Pakistan as far as its knitwear industry was concerned before it re-evaluated its currency. “Now it must be 17-18 per cent cheaper. Since China is still a closed economy, we can’t say with certainty if the re-evaluation of yuan would allow us grab some more market share.”

He said “Pakistan would gain more from the invocation of trade safeguards by the United States against China than a readjustment in the value of yuan”.

Mr Khurrum said “India’s textile industry was set to gain more than Pakistan due to American measures against imports from China and re-evaluation of yuan”. “The buyers,” he said, “will first go to India and then come to Pakistan.”

China’s share in the world’s textile market is estimated to be 17 per cent, which was projected to increase to about 50 per cent in three years after the abolition of the textile quotas from January 1, 2005. But the yuan readjustment and trade safeguards imposed by the US government are expected to put brakes on its forward march, reports suggest.

China, India, and Pakistan, which together consume 61 per cent of the total cotton production (with China alone consuming 37 per cent), were projected to “benefit most from the ending of the MFA (Multi Fibre Agreement) from this year that regulated the world’s textile trade for 30 years.

“Come what may, we wouldn’t be able to compete with China even after the current changes in the situation. We just cannot handle the kind of volume ordered by the importers. China certainly can. But still our industry will gain some share in the world market,” Mr Khurrum says.

Pakistan’s textile industry has invested $5 billion since 1999 to prepare itself for the post-quota world and projects to invest another $5 billion by 2010 for expanding capacity and technology upgradation.

Though Pakistan’s textile exports went up by 11.38 per cent in the first six months (Jan-June) of 2005 after the abolition of the quotas to $4.686 billion from $4.207 billion in the same period in 2004, most exporters say the textile exports are “restricted by lack of preferred market access to the EU and the US, absence of trained, skilled human resource, poor country perception of Pakistan, high cost of production, and such other factors”.