China firmly opposed the US move to slap new import quotas on textile products from China, a spokesman for the Ministry of Commerce said in Beijing Wednesday.

"The Chinese government expresses deep regret and firmly opposes this decision," said Chong Quan, spokesman for the Ministry of Commerce. He hinted that China may take the issue up with the World Trade Organisation.

Beijing reserved the right to protect its interests through the world trade body it joined in late 2001, he said in a statement.

The Bush administration said on Tuesday it decided to impose quotas on three types of textile products from China.

The decision will affect Chinese imports of knit fabric, dressing gowns and robes and bras.

Fears Washington might be shifting towards more protectionist policies pushed the dollar to record lows against the euro overnight.

The Chinese Commerce Ministry made no mention of possible retaliation despite calls for action by local business groups.

Chinese businesses still trying to work out likely damage to their bottom line said the government should do something.

"I think we should react somehow and call on the government to do something," said Shi Jianwei, executive vice president of the China Cotton Association.

"This will reduce our exports," said Shi, who is also director of China's Cotton and Jute Bureau.

Next year's presidential elections in the United States appeared to be the main motivation behind Tuesday's announcement, he said.

Another association representing textile exporters, the China Chamber of Commerce for Import and Export of Textiles, said the move would "ruin the fundamental interest of Chinese textile exporters, as well as the American consumers and traders", it said in a statement.

It did not give estimates for likely economic losses to China's textile industry which employed more than 15 million people directly and over 100 million indirectly.

Highlighting China's growing imports from the likes of the United States to keep its economy booming, it said imports of US fabric and textile raw materials and products had risen 148 percent on the year from January to September to US$787 million.

The American textile industry praised the decision to impose quotas on knit fabrics, brassieres and dressing gowns.

But it said this should merely be a first step towards putting a lid on virtually all of China's textile imports, either through negotiation with Beijing or by Bush administration decree.

An International Monetary Fund senior adviser for Asia, Steven Dunaway, called the quotas "a big risk in the current environment" and one that could prompt Chinese retaliation.

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