Last-ditch efforts to defuse a potentially explosive trade dispute began today with U.S. and Chinese officials resuming negotiations on China's textile exports to the United States.
The controversy threatens to further unravel already frayed political ties shortly before Secretary of State George P. Shultz's scheduled visit to China Feb. 2.
At issue is a U.S. attempt to restrict mushrooming Chinese exports of textile products at a time of deepening recession in the American textile industry.
After three earlier negotiating sessions collapsed in acrimony, the Reagan administration announced last month that it would unilaterally curb certain Chinese textiles Jan. 15 if the two sides fail to reach accord.
China, which asserts the right to sell goods to help offset a hefty U.S. surplus in overall bilateral trade, has warned it would retaliate economically.
U.S. textile negotiator Peter Murphy met throughout the day with his Chinese counterpart in what was described as "informal discussions" to set an agenda for the talks. Neither side chose to characterize the first day's meeting.
The talks are aimed at replacing a 1980 agreement setting U.S. quotas for seven categories of Chinese textile exports.
What the U.S. side now wants is to extend quotas to another 26 items ranging from gloves to brassieres. This would limit the growth rate of China's most important export to the sale level set for the three largest textile suppliers--Hong Kong, Taiwan and South Korea.
Although China now ranks behind those three, its textile exports have risen so fast--41 percent in 1980, 73 percent in 1981 and 32 percent in the first 10 months of 1982--that American industry officials began viewing it as the most serious competitive threat.
The proposed curbs would restrain growth to no more than 2 percent annually for each of the controlled items.
Chinese officials oppose any restriction, claiming the growth rates are misleading because their textile goods are inexpensive. Since they only compete in the low price market, the Chinese demand the right to sell larger quantities so as to harvest their share of foreign exchange.
Chinese officials argue, furthermore, that Peking's large imports of U.S. cotton and synthetic fibers--in 1981 China actually suffered a $450 million "textile trade deficit"--entitle it to special treatment.
But trade statistics for the first 10 months of 1982 seem to dilute China's thrusts. Although it absorbed a trade deficit of $655.6 million, the imbalance was less than half of last year's for the same period.
The dispute is said to have potential for serious political repercussions in a relationship still badly strained by U.S. arms sales to Taiwan.