CHINA has established a fund to support innovation and energy efficiency in the textile industry as it tries to ease trade frictions, Xinhua news agency reported, citing an official from China's top planning agency.

The fund, using 1.36 billion yuan (US$175 million) from textile export tariffs, will help develop new fibers, reduce environmental impact and upgrade technology, Xinhua said, citing Zhang Li of the Bureau of Economic Operation, part of the National Development and Reform Commission. Xinhua did not identify Zhang's title, Bloomberg reported.

The government wants to encourage a different pattern of growth in the industry, including developing more products with proprietary intellectual property rights, to reduce dumping accusations against China, Xinhua said.

Zhang said China's textile exports climbed 25 percent last year from 2005, accounting for 15 percent of total exports, according to the news agency.