Alphatex Beijing Knitting, which supplies cashmere sweaters to Harrods department store, expects sales to grow at least 30 percent this year, managing director Christian Murphy said. Li & Fung, Hong Kong's largest trading company, does not anticipate new barriers will spoil its growth, investor relations manager Nancy Chen said.

Forty years of US and European quotas on 2,400 items, including cotton shirts and denim, ended two days ago under a World Trade Organisation agreement. Lawyers including Patrick Norton say anti-dumping lawsuits and alternative trade curbs won't slow growth in China's textiles and garment exports, which rose 26 percent to US$86 billion (HK$670.8 billion) in the first 11 months of 2004. ``The end result is inevitable: China is going to take a much larger share of the market,'' said Norton, managing partner of the Beijing office of US law firm O'Melveny and Myers.

Nine in 10 textile makers in China are expanding production, according to a survey by Global Sources released on November 29. Alphatex spent US$500,000 on new machines and doubled its workforce the past six months. ``The lifting of the quotas means it will be open season for us,'' Murphy said.

US and European textile makers, worried about the loss of jobs, have lobbied their governments to impose protectionist measures. The US Department of Commerce has said it would grant ``safeguard'' protection to local producers as long as they could prove imports threaten their businesses.

``The US industry believes this is a life-or-death battle,'' said Beijing-based US trade lawyer Matthew McConkey of Coudert Brothers.

A New York judge blocked the US on Thursday from imposing new curbs on textile imports. Judge Richard Goldberg of the US Court of International Trade granted an injunction sought by the US Association of Importers of Textiles and Apparel, which represents Liz Claiborne and other retailers who benefit from a free market in textiles. His ruling will stand, pending further court action.

Anti-dumping action against mainland textiles may increase. The EU has said it will cut the amount of paperwork required for companies to make complaints about products they claim are being sold below market value.

The EU said in early October it would simplify its system of preferential tariffs to bring them into line with global trade rules and provide more support to poor nations such as Bangladesh and Pakistan. China, which produces a third of EU textile imports, will pay higher tariffs as a result.

Trying to ease any backlash, China said last Monday it would impose a 0.2 yuan (HK$0.18) tax on all textiles exported and possibly cap exports on some high-volume, labor-intensive textiles.

``The measures that may be imposed in the US or Europe will only temporarily slow down orders moving to China. We're not worried,'' Li & Fung's Chen said.

China may get between 70 percent and 80 percent of worldwide textile production after January 1, Li & Fung executive director Bruce Rockowitz said last August. Ninety-one percent of 205 mainland manufacturers surveyed in 15 provinces said they are setting up new factories or making existing plants bigger, according to Michael Kleist, general manager of Hong Kong-based Global Sources.

Asian countries that compete with China may have most to lose. The 12 biggest accounted for 36 percent of US textile and clothing imports last year, according to the US Office of Textiles and Apparels. China made up an additional 17 percent.

US textile industry doomsayers are ignoring a critical fact - proximity, the Harvard Center for Textile and Apparel Research report said. Wal-Mart Stores and other US chains prefer suppliers in North and Central America and in the Caribbean for garments like jeans and T-shirts because they are closer to home and can quickly replace supplies as they run out on store shelves.

Plans by some European textile makers to shift production to China were deterred by the quotas, Murphy of Alphatex said. The way forward for US and European textile companies is to get out of high-intensity manufacturing of low-priced goods and move into design and marketing, he said.

``Come hell or high water, there will be structural changes in the US and Europe,'' US trade lawyer McConkey said. BLOOMBERG