Zero growth in the second quarter has been foreshadowed by many industrial experts, in sharp contrast with the surge observed in the first three months of the year.

Textiles are being particularly badly hit because face-to-face contact is required to finalize most orders, said Sun Huaibin, a director from the China Textile Industry Association.

The dramatic slowdown in China's textile and apparel business is mainly due to the cancellation of visits by United States and European Union (EU) buyers, he added.

Buyers should now be in China, ordering apparel for the fall and holiday seasons, but most of them have not come.

"The Internet cannot solve the problem, as many textile products must be seen by eyes and felt by hands," Sun said.

Importers have also cancelled orders for fear of delivery delays.

Although health authorities including the World Health Organization say SARS cannot be transmitted through contact with textiles or clothing, many countries have delayed Chinese textile exports at their ports.

Xuan Jiyong, president of the Zhejiang-based New Square International Trading Company, a textile trader, said exports to the US, a key market for local companies, had virtually dried up.

Chinese shipments are delayed at US ports for one month.

"Even the samples sent by express will be held up for a few days" Xuan said.

Middle East countries are even asking for US$3,000 for every container for a SARS check, pushing costs higher, he said.

Sun said many US and EU importers have transferred orders to other low-cost countries.

Bangladesh, Pakistan, India, Turkey and Cambodia are expected to benefit from the demand shift.

India's textile union minister, Kashiram Rana, said last week India had been experiencing a boom following the widespread non-acceptance of fabric from China in the US and Europe.

The demand for Indian-made fabric had increased to such an extent that it was more than the permitted quota of exports under an international agreement, Rana said.

A group of Indian textile industry representatives and government officials went to Brussels to make a case for increasing the permitted quota of exports to the EU, he added.

But Sun said such transfers could be temporary as China's textile quality and costs were second to none.

"We should have controlled this SARS epidemic by the second quarter of the year, so the impact should be transient," he said.

In the long run, orders to China will rebound as soon as SARS is under control, Sun said.

China's exports in the first quarter went up by 24.83 per cent to US$15.09 billion, compared with the same period last year.

For the whole of 2003, exports were officially forecast to rise just 3 per cent to US$62 billion, which was once considered conservative.

In addition to decreasing overseas demand, a fall in domestic apparel retail sales has made the situation worse.

Wu Huiming, the general manager of the Wuxi Textile Industry Group, said domestic sales to SARS hotspots such as Beijing and Guangzhou had been hit hard.

With overall demand falling, inventories are piling up in a large number of plants.

"Many orders have evaporated. The whole chain -- from garments to textile materials to dyeing and spinning factories -- will be affected," he said.

"Many of the smaller private textile companies have temporarily closed down."

The China Textile Industry Association has suggested the industry uses the lull to readjust and invest more in technology development.

(China Daily May 23, 2003)