China scraps export charge hike in trade war with West

China has scrapped plans for a sharp increase in export tariffs meant to restrain a surge in textiles to overseas markets amid a trade dispute with the US and Europe.

The government announcement today did not explain the reason for the step but noted that it came after the US and the European Union took steps to restrict imports of Chinese clothing and textiles.

Imports of low-priced Chinese textiles in US and European markets have soared since a global quota system expired on January 1.

The Chinese tariffs were announced in an apparent effort to persuade Beijing's trading partners to let it handle the problem.

Beijing had announced earlier that it would quintuple export tariffs on 74 types of goods on June 1, trying to persuade its trading partners not to restrict textile imports.

"A previous decision to quintuple the export tariffs on 74 textile categories, on which export tariffs were imposed from January 1 this year, was revoked," the official Xinhua News Agency said, citing the Customs Tariff Commission of China's Cabinet.

It said the decision was made "in the wake of European Union's decision to impose quotas on imports of Chinese textiles, as well as US' decision to reimpose restrictions on seven kinds of Chinese textile and clothing imports recently".

Already on Friday, the Chinese government reacted to US import quotas by saying the new export tariffs would not apply to goods already affected by foreign controls.

Today's announcement came after Beijing criticised the EU for taking the dispute to the World Trade Organisation, triggering curbs on imports of Chinese T-shirts and flax yarn.

The US says imports of Chinese clothing and other textile goods are 54% above last year's level. The EU says imports of Chinese-made T-shirts rose by 187% in the first four months of this year, while flax yarn imports rose by 56%.

The EU took the dispute to the WTO on Friday, giving China 15 days to react. It means the EU will be allowed to restrict the growth of imports of flax yarn and T-shirts to an annual rate of 7.5%.

A statement yesterday by China's Commerce Ministry complained that the step "harmed the rights that Chinese enterprises should enjoy in the globalisation of textile trade".

Washington earlier imposed controls restricting growth of imports of Chinese-made cotton pants, underwear, synthetic fibre shirts and other goods to an annual rate of 7.5%.

Commerce minister Bo Xilai said earlier that the United States and the EU were partly to blame for the sharp increase in textile imports, saying they failed to keep promises to open their markets before the quotas expired.

The textile controls were imposed under terms of China's membership agreement with the WTO that let its trading partners restrict imports that are disrupting their markets.

The Commerce Ministry said yesterday that China was a "responsible member of the WTO" and had imposed its own "positive measures".