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.