CHINA TIGHTENS CONTROLS ON EXPORTS OF SILK PRODUCTS

CHINA TIGHTENS CONTROLS ON EXPORTS OF SILK PRODUCTS

The Chinese government appears to be tightening up further on exports of silk products, which last year earned an estimated US$1.8 billion in foreign exchange.

A report Tuesday by China's official overseas news service said exports of printed silk, silk garments and carpets will be placed under the direct control of the Ministry of ForeignEconomic Relations and Trade, known as Mofert.A system of unified domestic purchases and sales of silk was instituted 18 months ago in an attempt to end the so-called cocoon wars that broke out during a supply shortage.

Export duties of 100 percent on silk and 80 percent on satin were levied on overseas sales by companies not operating under the national silk entity.

Under the new regimen, even authorized companies will be required to export only through China National Silk Import and Export Corp., which comes under Mofert's wing.

This move is said to be a bid to stop exports of substandard goods, which could damage China's reputation. The country is the world's largest supplier of silk and silk products.

The state entity, Cnsiec, forecast that this year's exports will be 9 percent greater than last, thanks to what General Manager Huang Jianmo called an "orderly market and stable supply." The 1989 estimate of US$1.8 billion in overseas sales was 6 percent higher than the US$1.7 billion exported in 1988.

Cnsiec was granted a monopoly on cocoon purchases beginning last January, and Mr. Huang said he expected to extend the range of his monopoly. He gave no details then, but the new controls would seem to be what he had in mind.

His estimate of higher export earnings last year came despite an acknowledged slump in the market that became evident in the middle of 1989.

Mr. Huang thinks this year's raw silk sales will be strong in Western Europe and Japan, while the United States will be the top export market for silk garments.

China's 21 percent devaluation of its currency last December is likely to have a beneficial impact on exports of silk as well as other goods. State-set prices were last raised in 1988, by 60 percent.

After two years of shortages, output of cocoon is expanding rapidly and could exceed demand by 1991, the first time any analysts here can recall that happening.

At the same time, countries in South Asia are stepping up their silk output, and some non-traditional players such as South Korea are believed to be experimenting with silk garments.

This combination of greater supply and stiffer competition could dash China's hopes of continuing to boost exports.