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ACTION EB-07
INFO OCT-01 EA-07 ISO-00 AGR-05 CIAE-00 COME-00 INR-07
LAB-04 NSAE-00 SP-02 STR-04 TRSE-00 CIEP-01 FRB-03
OMB-01 L-03 SS-15 NSC-05 DODE-00 PA-01 USIA-06 PRS-01
/073 W
--------------------- 115093
R 260613Z APR 76
FM AMCONSUL HONG KONG
TO SECSTATE WASHDC 0065
INFO USLO PEKING
AMEMBASSY TOKYO
AMEMBASSY TAIPEI
AMEMBASSY SINGAPORE
LIMITED OFFICIAL USE HONG KONG 4653
E.O. 11652: N/A
TAGS: ETRD, EEWT, EPAP, CH, US
SUBJECT: PRC POLICY ON TEXTILE EXPORTS TO US
SUMMARY: A PRC OFFICIAL, COMMENTING ON POSSIBLE US
TEXTILE RESTRAINTS TO AN AMERICAN JOURNALIST AT THE
CANTON FAIR, DEFENDED THE 1975 LEVEL OF TEXTILE EXPORTS
TO THE US, BUT ALSO INDICATED THAT THE FUTURE COTTON
TEXTILE EXPORT GROWTH RATE MAY BE MORE MODERATE. THE
REDUCED RATE MAY RESULT FROM ECONOMIC FACTORS, A
CONSCIOUS DECISION REFLECTING SENSITIVIITY TO ROWING US
PRESSURE, OR BOTH. THE OFFICIAL'S ATTITUDE PROBABLY
REFLCECTS PEKING'S UNCHANGED POSITION OPPOSING QUOTAS
ON ITS TEXTILE EXPORTS TO THE US. END SUMMARY.
1. SOON AFTER THE 1976 SPRING CANTON FAIR OPENED APRIL
15, A CHINA NATIONAL TEXTILE IMPORT AND EXPORT CORPORA-
TION (CHINATEX) OFFICIAL RESPONDED TO AN AMERICAN
JOURNALIST'S QUESTION ON POSSIBLE IMPOSITION OF US
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TEXTILE QUOTAS BY CITING THREE FACTORS TO DEFEND PAST
CHINESE EXPORTS, AND A FOURTH TO SUGGEST THAT FUTURE
GROWTH RATES WILL BE MORE MODERATE. FIRST, HE NOTED THAT
CHINA HAD ONLY RECENTLY STARTED EXPORTING TEXTILES TO THE
US, AFTER A LONG HIATUS. FURTHER, HE SAID THAT 1975'S
RAPID GROWTH RATE WAS DUE TO THE INCREASED DEMAND
CREATED BY RAPID US ECONOMIC RECOVERY. FINALLY, HE
ASSERTED THAT THE US PRINTING AND DYING INDUSTRY IS
NOT RUNNING A FULL CAPACITY DUE TO INSUFFICIENT GREY
CLOTH SUPPLIES. SINCE THIS NEED IS NOT BEING MET BY
THE DOMESTIC TEXTILE MANUFACTURING INDUSTRY, CHINA SEES
NO REASON WHY IT SHOULD NOT FILL BHE DEMAND. IN THE
FUTURE, BY CONTRAST, SUCH RAPID GROWTH WILL PROBABLY NOT
CONTINUE. CHINATEX IS NOW RUNNING DOWN ITS "STOCKPILE"
OF CLOTH. WHEN THAT IS FINISHED, CHINATEX WILL ONLY
BE ABLE TO EXPAND EXPORTS GRADUALLY. ALSO, CHINATEXT MUST
CONSIDER DEMAND FROM OTHER COUNTRIES IN ALLOCATING
INCREASED SUPPLIES.
2. THE AMERICAN JOURNALIST (STRAUSS--JOURNAL OF COMMERCIE AND
FAR EASTERN ECONOMIC REVIEW) TOLD CONGEN ECONOFF HE FOUND THE
CHINATEX OFFICIAL, A "MR. CHIANG," WHO WORKS IN THE COTTON
CLOTH EXPORT DEPARTMENT OF CHINATEX, VERY KNOWLEDGEABLE
ABOUT THE US TEXTILE MARKET.
3. CHIANG ALSO CONFIRMED THAT PRC TEXTILE EXPORTS TO
THE US IN 1975 WERE FACILITATED BY A DIFFERENTIAL
PRICING POLICY. CHINATEX SETS ITS US MARKET PRICE
BELOW THAT FOR OTHER MARKETS TO COMPENSATE FOR THE
HIGHER US NON-MFN TARIFF. HE NOTED, THAT CHINATEX IS
CAREFUL IN SETTING ITS GREY CLOTH PRICES EVEN TAKING INTO
ACCOUNT CURRENT AND FUTURE US RAW COTTON PRICES. THE
US, HE ADDED, IS A MARKET WITH GREAT POTENTIAL, AND
CHINATEX WANTS TO GET INTO IT. SINCE CHINATEX WANTS
TO BY FROM THE US, IT MUST ALSO SELL TO IT.
4. COMMENT: THE CHINATEX OFFICIAL'S SEEMINGLY WELL
PREPARED REMARKS APPEAR DESIGNED TO DEFEND PRESENT
EXPORT LEVELS YET WEAKEN POTENTIAL US CRITICISM OF
THEM BY HOLDING FORTH THE PROMISE THAT FUTURE CLOTH
EXPORTS WILL DECLINE. THE STATEMENT DOES NOT SEEM
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TO SIGNAL ANY DEPARTURE FROM PEKING'S KNOWN OPPOSITION
TO QUOTAS ON ITS US TEXTILE EXPORTS. WHILE REDUCED
DROWTH IF IT MATERIALIZES, COULD HAVE SEVERAL CAUSES,
CHIANG'S STATEMENT REGARDING A RAPIDLY DIMINISHING
STOCKPILE OF COTTON CLOTH IS SUPPORTED BY EARLY
REPORTS FROM THE SPRING CANTON FAIR THAT THERE IS A
SHORTAGE OF COTTON FABIRC FOR SALE. AS A RESULT,
SOME BUSINESSMEN ARE BEING QUOTED DELIVERY TIMES
BEYOND THE FALL 1976 CANTON FAIR (OCT. 15-NOV. 15).
CROSS
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