China warns US on import limits

China will ''respond strongly'' if the United States imposes import restrictions on Chinese textiles, possibly retaliating by slapping import quotas on US goods, a government official warned.

The tough position was outlined by a Trade Ministry official shortly before the start of a final make-or-break round of negotiations to resolve the hottest dispute in Sino-American trade.

Western sources said the Chinese have informed US businessmen that China will cut back on US imports - notably corn, logs, and wood products - if the Reagan administration imposes restrictions unveiled in Washington on Dec. 28.

The US already has postponed the threatened imposition of quotas once in order to give the negotiators a last chance to resolve the dispute before Secretary of State George Shultz pays a visit to China early next month. ''Neither side wants this to blow up before then,'' a Western diplomat said.

At issue is a new agreement, under negotiation since August, to limit the amount of textiles and clothing China exports to the US.

China sold $590 million worth of textiles to the US in 1981 and, under an agreement that expired Dec. 31, has been allowed to expand exports by 6 percent a year in several restricted categories.

The Chinese want a similar agreement this time. But under pressure from the recession-hit US textile industry, Washington wants a much more restrictive agreement subjecting a wider range of textiles to quotas.

China, which regards economic agreements with the US as part of a step-by-step expansion of relations, sees the US proposals as retrogressive and a sign of bad faith.

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