"Politically, they can't stand to compete in a free trade in textiles, in my opinion, " Robert Mundell told an audience of Irish and Chinese academics at UCD's O'Reilly Hall. China's low-cost wares are a hit with consumers at retailers like Penneys, and in the US, where China racks up a $200bn annual trade surplus that has contributed to its $1.3 trillion foreign reserves war chest. But growing Chinese prowess threatens jobs in the developing world, as well as less ef"cient developing countries like Mexico and India, with "creative destruction".

The restrictions were agreed in 2005 to end the so-called "bra wars", when a surge of Chinese underwear, T-shirts and trousers were halted in European ports after accusations from European manufacturers. The surge of exports came after a 10-year agreement to restrict the growth of Chinese textile exports came to an end.

Canadian-born Mundell, a professor at New York's Columbia University who is known as the "father of the euro" for his work that led to the European currency and for which he won the 1999 Nobel Prize, made the prediction during a keynote speech at a conference launching UCD's Confucius Institute for the study of China.

The inability of Europe to compete with China in the "bra wars" illustrates the "competitive shock" China poses to the rest of the world, according to Mundell.