Australian Wool Testing Authority’s China liaison manager, Robert Wang, said the wool giant was confident it could counterbalance reduced demand in its traditional markets, Japan, USA, Europe and South Korea, by targeting China's domestic market, which had been buoyed by the Chinese government’s $600 billion stimulus package that had a 10 per cent textile focus.

“The emphasis has clearly changed from an export to a domestic focus,” Mr Wang told Rural Press after visiting China.

“The export market is really struggling throughout China, yet domestic wool sales in China are very good.”

Mr Wang said Sunshine’s chief executive, Xiuming Cao, confirmed there would be no changes to their wool buying and emphasised that he believed there was "no replacement for Australian wool".

“He is pretty confident about wool remaining in demand,” Mr Wang said.

With China celebrating its 60th anniversary for the people’s Republic of China this year, Mr Wang said Mr Cao was confident Sunshine could boost its wool sales as the event meant all soldiers received a new uniform, of which the bulk are made from fine Merino wool.

In an assessment of Chinese wool buying consumer trends Mr Wang said the suit market continued to lead the market. However, the knitwear sector had shown sustained growth over the past three to four years.

This demand is expected to continue pushing the Meirno oddments market, which AWEX reported last week had continued to attract strong competition, and trend up by a further two cents a kilogram to 507c/kg clean.

Landmark’s wool and economic focus reported China’s exports of wool clothing in 2008 (knitwear and woven wear) dropped by 5pc with exports to Japan down 8pc, to the USA down 9pc and a 23pc fall in exports to South Korea.

Exports to the Commonwealth of Independent States (former USSR) fell by 57pc and to Hong Kong down 21pc.

This demand was offset by a 40pc rise in sales to European Union for the same period.

Landmark’s risk manager wool and livestock Anthony Boatman, said the lift in exports of wool clothing to European Union countries could be attributed to retailers in the EU switching to the lower-priced supplies from China and away from the higher-priced European offerings.