The United States slapped extra curbs on Chinese imports on Thursday, hours after talks on a formula to deal with China's surging textile shipments ended in failure.
The limits on Chinese-made bras and synthetic filament fabric used to make high-end clothing underline the growing friction in Sino-American trade ties and cast a shadow over President Hu Jintao's visit to the United States next week.
Beijing and Washington had hoped that Hu and President George W. Bush could bless a textiles pact as a positive development in a relationship strained by political issues such as Taiwan as well as by China's swelling trade surplus.
But officials from the two sides met only briefly on Thursday morning after two days of haggling in the Chinese capital failed to narrow differences.
"Despite our best efforts we were not able to reach a broader agreement. The United States remains optimistic that we can continue to make progress on the remaining issues," David Spooner, the head of the US negotiators, said in a statement.
Not long after, the Commerce Department in Washington announced the new curbs but said it would delay until October 1 a decision on whether to restrict imports of sweaters, robes, wool trousers and knit fabrics.
"Today's announcement demonstrates the administration's commitment to levelling the playing field for US industries by enforcing our trade agreements," Commerce Deputy Assistant Secretary Jim Leonard said in a statement.
China said differences remained in some areas of principle, according to the official Xinhua news agency, citing a statement from the Ministry of Commerce.
"The ministry said that both sides agreed to maintain consultation and will set the date and location of the next round of negotiations by diplomatic channels as early as possible," the report added.
The new curbs mean more uncertainty for both exporters and importers, whose business has been disrupted by barriers erected by the United States and the European Union following a surge in Chinese exports unleashed by the end of global textile quotas on January 1.
Peter Liu, chairman of the textile and apparel committee of the American Chamber of Commerce in Hong Kong, said nervous buyers were ordering less from China and switching to suppliers in countries such as Cambodia and Vietnam.
"They are not pulling out completely but they are pulling orders out of China, especially in high-risk categories," Liu told Reuters.
"In our business you cannot switch sourcing positions overnight. You have to do it in an orderly manner and now there is a big gambling factor. If you place your bet on China, you can either lose big or win big," he said.
US and Chinese negotiators had been eyeing a pact similar to one signed with the EU in June that capped growth in 10 categories of textile products at 8 to 12.5 percent a year, instead of the lower 7.5 percent ceiling allowed until the end of 2008 by World Trade Organisation rules.
That deal has since run into trouble as the new quotas were quickly filled, leaving a pile-up of more than 80 million made-in-China bras, blouses and sweaters at EU customs posts.
US and Chinese officials have met four times since May when Washington imposed a first set of curbs, known as safeguards, on Chinese textile exports to the United States, which nearly doubled to $7.4 billion in the first half of 2005.
Spooner said Washington would be consulting with Beijing over the next few days on a date for the next round of talks. But US industry officials who travelled to Beijing said the two sides remained far apart.