U.S. Restrictions on Chinese Apparel, Hair & Tech Products May Increase Dependency on India

The Trump administration on Monday imposed new restrictions on imports of textiles, hair products, as well as technology goods from some Chinese companies, mentioning those companies have used forced labor in Xinjiang to make their products.

According to the Department of Homeland Security, the broader measure was undergoing further legal analysis, and that more announcements could be made soon.

 “These extraordinary human rights violations demand an extraordinary response,” Kenneth T. Cuccinelli II, the acting deputy secretary of homeland security, said. “This is modern-day slavery.”

On Tuesday, Wang Wenbin, a spokesman for China’s foreign ministry, denied that companies in Xinjiang use forced labor. “This fully exposes the hypocritical faces and sinister intentions of those in the U.S. hoping to curb Xinjiang’s development and progress and sow Chinese ethnic dissension,” Mr. Wang told.

“With China being the leading apparel exporter, accounting for more than 35 per cent of the global trade and more than three-fourths of China’s cotton originating from the Xinjiang region, any extension of the ban to a wider base in China could trigger a material shift in global apparel trade in coming years,” Icra Ratings Senior VP and Group Head Jayanta Roy said.

Amid the COVID-19 crisis, several international buyers are thinking of expanding their sourcing base across countries. Several major clothing exporters in India have already started receiving big orders or are discussing the requirements of large international buyers, looking at boosting their sourcing from India.

 “While over the past few years, Vietnam and Bangladesh have been the key beneficiaries for a shift away from China, India also stands to gain from any such market opportunity which may arise, given its strong presence in the cotton-based apparels,” Roy added.