The International Monetary Fund said on Tuesday it had warned the United States against taking trade actions against China, such as the textile quotas unveiled earlier in the day.

"It's a big risk in the current environment that there could be such measures against China," Steven Dunaway, senior advisor in the IMF's Asia-Pacific Department, told a conference call about the fund's annual assessment of China's economy.

Dunaway said the Chinese government also had warned that they would not hesitate to retaliate.

"It is the kind of situation which the IMF strongly discourages on both sides so we have cautioned the U.S. not to use such ... policy," he added.

The Bush administration earlier on Tuesday said it would impose import quotas on knit fabrics, brassieres and dressing gowns from China, the latest twist in an often troubled trading relationship between the two economic giants.

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