The US has branded China's decision to place a tax on its textile exports as inconsistent with World Trade Organisation regulations, and unhelpful economically.

China introduced the export tax in an attempt to alleviate international fears that it will dominate world textiles trade after export quotas ended at the start of 2005.

Speaking during a visit to Hong Kong the US undersecretary for international trade, Grant Aldonas, said that a 2-4 per cent export tax was technically illegal under WTO legislation.

According to Reuters news reports, Aldonos added that the tax was too low to have a worthwhile effect on exports to the US and said that, instead of introducing taxation, China needed to open itself up to international textile imports and eradicate incentives making Chinese production unfairly cheap.

WTO rules allow the US to place annual restrictions on textile imports from China until 2008, but its Commerce Department has been banned from pre-emptively limiting shipments.

US officials say the Justice Department is currently considering whether to launch an appeal against the court's decision.