The news that China will raise export tariffs on 74 textile products has caused the sharp decrease of related stock prices Monday in Shanghai and Shenzhen Stock Exchanges.

Last Friday, China announced it will raise the export tariffs on 74 textile products, with a 400-percent hike for most of the products on a quantitative basis, beginning June 1, 2005.

Textile-related stocks including Ningbo Firs and Huafang dropped 10 percent during the day, making the Shanghai stock index slip by 2.59 percent to 1070.84 points, the lowest during six years. The Shenzhen index dropped by 2.06 percent to 2840.97 points.

The regulation change means the tariffs on each piece of the export textile or clothing product would increase from 0.2 yuan (2.4 US cents) to 1 yuan (12 US cents), according to the Customs Tariff Commission of the State Council, China's cabinet.

The tariff hike was announced in the wake of a United States decision last week to re-impose restrictions on seven kinds of China textile and clothing imports. The European Union is also pressuring China to take stricter measures to curb textile exports to the European market.

Source: Xinhua