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By John Pomfret
Washington Post Foreign Service
Thursday, September 20, 2001; Page A14

SHANGHAI -- As America wraps its wounds in red, white and blue, flag factories in China are running nonstop to feed the overwhelming demand in the United States for the Stars and Stripes.

At the Shanghai Mei Li Hua Flags Co., office director Wu Guomin has received orders for more than 500,000 flags from customers in the United States in the week since the terrorist attacks in New York and Washington. "I guess because we make so many of these things you could say we feel a little closer to the situation there," Wu said as he fingered an American flag. "We're working day and night."

The Jin Teng Flag Co. in neighboring Zhejiang province reported orders of 600,000. "It's crazy and very, very sad," said Jin Teng, the factory owner. "Everyone is on overtime trying to satisfy demand."

Jin and Wu said that even with China's National Day fast approaching on Oct. 1, they have stopped making Chinese flags so that they can fill U.S. orders.

"We've been presented with an opportunity to make a lot more money than we usually do making these flags," said Wu, whose factory sells medium-size flags to U.S. distributors for about $1 apiece. "But we won't take it. We really didn't want to make too much of a profit on other people's sadness."

At the Shanghai plant, Fei Xiaohua, a laborer, was sewing a 6-by-9-foot flag. "This is my 50th so far today," she said, her fingers working nimbly. "Sometimes I don't like this job. But this time, what I'm doing seems worth it."

It is unclear what percentage of U.S. flags are made in China, but as with all textiles, the numbers have boomed in recent years. China produces more shoes and clothes for the U.S. market than any other country. In a few years, China will become the biggest producer of computer parts for the U.S. market as well.

The flag business illustrates the increasingly close trade ties between China and the United States, valued last year at more than $100 billion. Those ties are expected to expand with China's imminent accession to the World Trade Organization (WTO). China moved a giant step forward toward that goal last weekend when the organization generally agreed on its conditions for entry.

"WTO should provide a great opportunity for us," said Wu, a suave 44-year-old manager. "Right now, no one around the world can really compete with us flag makers. We have good machines and rock-bottom labor costs."

Wu and Jin said they hoped Americans would not mind that Chinese were making their flags. The manufacture of such patriotic symbols has caused trouble in the past. Following the April 1 collision of a U.S. Navy reconnaissance plane and a Chinese jet fighter off China's southern coast, the Pentagon canceled contracts to outfit Army soldiers with a "Made in China" black beret.

China, too, has used trade as a lever in relations with Washington, expressing occasional discontent with U.S. policies by cozying up to Europe's Airbus Industries instead of Boeing Co. But this time, in the days following the disaster, as the global airline market crashed, China repeated its commitment to buy 30 Boeing 737s, making it one of the world's bright spots for aviation firms.

"We are living in a really global world right now," said Wu. "It's natural that China manufactures simple things for the whole world. We have a manufacturing economy."

But Sun Zhenyu, a top trade official, warned today that China's export growth, a key element in China's economy, will likely face a serious threat for the remainder of the year, according to the official New China News Agency. Already, Chinese travel agents are reporting hundreds of cancellations.

"The U.S. economy is already bad, surely this will affect the global economy, including China," Sun said.

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