According to a new report, the growth rate of sales of Chinese textiles slowed significantly last year, dropping almost 20% due to a higher valued Chinese currency, a cut in export tax rebates and higher labour costs.

Textile enterprises reported sales of yuan 2.42 trillion ($318 billion) in 2006, 21.33% higher than the previous year but five percentage points lower than the growth rate in 2005. After-tax profits reached yuan 88.3 billion, a rise of 27.96% but eight percentage points lower than in 2005. Industry profits declined for the sixth straight month, according to the report, which was published in the China Securities Journal.

China's exports of textiles, clothing and accessories in January grew 18.55% compared with the same month last year; however, the growth rate was 12.3 percentage points lower than the growth rate in November and 12.2 percentage points lower than December's rate of growth, according to statistics from China's General Administration of Customs.

Chinese textile and clothing companies have enjoyed sustained rapid export growth following the country's accession to the World Trade Organisation (WTO) in 2001, but, Chinese textile and clothing exports have encountered criticism from Europe, the United States and some African countries.

The US government filed a complaint with the WTO in early February, alleging that China is using export subsidies to help its companies, including those in the clothing sector, to compete in world markets. The USA^—the largest destination of China's textile and clothing exports—could impose a 27.5% tariff on its clothing exports if negotiations and discussions on the issue produce no results.

According to the country’s Chamber of Commerce for Import and Export of Textiles (CCCIET), its direct textiles and attire exports to the USA reached $21.9 billion in 2006, making up 15.24% of the US market, a drop of 1.42 percentage points compared with the previous year.