China is close to announcing a new quota-allocation system on garment exports, say industry executives, a sign that the government is resigned to more-restrictive access to overseas markets for several more years.

The likely new system, which is expected to be unveiled in a few days and would determine how much individual Chinese companies get to sell to European markets, is linked to a recent Chinese-European agreement that limits the growth of certain Chinese clothing exports to those markets. The new quota-allotment system could also be adapted for exports to the United States, though this could be dependent on whether authorities reach a similar agreement in coming U.S.-Chinese negotiations, according to people familiar with the matter.

As part of the terms of joining the World Trade Organization, China agreed to allow fellow WTO members to impose a 7.5 percent cap on its garment exports for three years following the end of global quotas on Dec. 31, 2004, if Chinese exports cause local market disruption. Several countries activated this clause following a dramatic increase in Chinese garment exports in the first few months of this year.

While Chinese authorities are still working out details of a new quota-allocation system, indications are that it will essentially be a variant of one used before the expiration of global garment quotas at the beginning of this year, which parceled out fixed limits on how much individual garment companies could sell overseas.

Analysts say a revival of this system, which in the past favored large, state-run corporations, could squeeze out thousands of China's small manufacturers, many of whom had expanded significantly in anticipation of a level trading field in 2005. In addition, they say, it will encourage inefficiencies and black-market quota trading and delay the fall in garment prices that many economists said would follow the unshackling of restraints on Chinese garment exports. A December report by consulting firm A.T. Kearney Inc. had estimated that garment retail prices could fall 8 to 18 percent over the next two years, partly because more retailers would shift their garment sourcing to China from other countries.

Currently, many China-based apparel-company executives are in Beijing lobbying for concessions under the new system, which will likely be doled out depending on each company's previous exporting history and product mix, with authorities favoring companies that make higher-value garments.

Some private companies are also pushing for a greater portion of the quota's distribution to be allocated through public bidding, allowing for a more equitable and transparent system. In the past, less than 10 percent of the quota allocation was officially available through public auction, with the rest allocated through state-owned corporations or trading companies, according to Ren Linna, textile researcher from Masterlink (HK) Securities Shanghai Representative Office, a research company based in Taiwan.

China's Ministry of Commerce, which oversees the country's garment exports, would not confirm if a new quota allotment system would be put in place.

Private companies and joint ventures now make up 92 percent of China's textile industry, compared with almost none 15 years ago, while state-owned companies now account for 8 percent of the industry, down from 13 percent two years ago, according to the China National Textile Council.

The small to mid-size companies, which had tasted free trade for a scant few months this year, greeted the pending development with dismay. Many that couldn't afford to pay quota-allotment prices and hence exported little before this year have seen their businesses boom since January. Justin Mallen, director for San Francisco-based casual-wear agent Nancy Fox Associates, said it was difficult to find Chinese factories to take orders for the first half of this year. "They were overbooked -- they had so much to choose from," he said.

Mao Peixin, chairman of Shanghai Lituo Knitting Co., which supplies companies like Adidas-Salomon AG, predicted that companies making cheaper clothing products could be "crushed" in the new quota order, leaving space for high-end suppliers only.

Ellen Zhu in Shanghai and Qiu Haixu and Kersten Zhang in Beijing contributed to this report.

A woman works at a textile company in Eastern China. China may adopt a quota system for garment exports.