China's growing popularity amongst national retailers has for some time worried both the Brazilian government and national textile associations who have been pushing for a tougher line from Brasilia.
Bloomsberg announced yesterday the government is now planning to impose safeguard measures on clothing and shoes that it feels is causing severe market harm.
Imports from China are now six times higher this year and is acting to help stem job losses and factory closures in the industry.
The government has yet to finalise when and how it will introduce safeguard measures but Dilma Rousseff, the President's Chief confirmed press that action is being planned for the end of September.
"These, textiles and shoes, are the sectors most harmed by the Chinese," he told press in Sao Paolo Tuesday.
Proposals put forward by associations have called for strict implementation of measures including a mere one per cent year-on-year increase allowable on sensitive categories of imports from China.
Although China has yet to comment, such proposals made in June met with hostility from the Brazil-China Chamber of Commerce and Industry.
At the time, spokesperson for the organisation, Charles Tang, warned of retaliatory action from Beijing.
"If Brazil insists on unilaterally imposing safeguards, China may retaliate," he said in a statement in June.
He urged negotiation rather than confrontation adding: "China offers great potential for Brazilian firms."
The share of Brazil's apparel and textile import market occupied by the Chinese has risen this year to 19.36 per cent in volume terms from just over 11 per cent during the corresponding period last year.
China is now the largest supplier to Brazil overtaking the United States and Taiwan to number one spot.
Prices overall significantly went up by over 20 per cent on average during this year upto the end of July.
China prices however continued to fall with an average unit price for this year of $3 per kilo although still remained more expensive than many of its competitiors.
The continuing strength of the national currency, the Real, is making importing more attractive.
Domestic producers are also angry that they are paying too much in the way of taxes which is keeping prices high compared to cheaper imports.
So far this year, Brazil has not favoured importing apparel and textiles from neighbouring South American countries.
The top three suppliers to the large South American economy all came from outside the continent namely China, Indonesia and the US.
Argentina was the leading regional suppplier accounting for almost 9 per cent of the market in volume terms, up from 7.8 per cent in January-July 2004.
Prices for Brazil's Southern neighbour have, however, gone up 19.5 per cent this year from the corresponding period last year.
Asian countries continue to dominate the market with seven countries, including China, in the top ten leading suppliers to Brazil of apparel and textile.
The combined share of the market for this "group of seven" accounted for 60 per cent of imports into Brazil during the first seven months of the year.
