HANGZHOU, March 8 -- China, the largest supplier of American flags, is unlikely to suffer heavy losses from a new ban on made-in-China flags in U.S. military installations, Chinese manufacturers and industry observers have said.

"We have been actively expanding the domestic market for our products," said Huang Baolian, manager of a craftwork company in Yiwu, the eastern Chinese city famous for its commodities market. "Besides, we also produce flags for a lot more countries."

Statistics accessed from the United States Census Bureau website show that in 2012 the value of U.S. imports of American flags stood at 3.8 million U.S. dollars, the vast majority of which, or 3.6 million, was for flags made in China.

However, under the requirements introduced in late February, only the Defense Department is restricted to purchasing American flags made entirely in the United States, while federal agencies will continue to fly made-in-China ones.

The new law is regarded as a supplement to the 1941 Berry Amendment that bans U.S. bases from buying food, clothing, military uniforms, fabrics, stainless steel and tools that are not produced in the United States.

The demand for U.S. flags spiked in 2001 after the Sept. 11 terrorist attacks in New York but U.S. manufacturers could not keep up.

The value of national flag imports was only 747,800 U.S. dollars in 2000, but the figure jumped to a shocking 51.7 million in 2001, with China contributing 29.7 million dollars' worth of flags.

Chinese exporters, with their cheap labor and material costs, seized the opportunity, increasing production of American flags and successfully tapping into the American market.

However, faced with surging costs and the changing foreign trade environment, companies in Yiwu City are actively developing new products and soliciting customers in fresh markets.

"In Yiwu, there are almost no companies that only focus on producing national flags," said Huang, whose factory also makes various stationeries.

Chu Yin, a professor at the University of International Relations, labeled the U.S. ban "a typical public relations maneuver" and "symbolic patriotic marketing" that will have little practical effect on international trade. "Flag purchase accounts for only a small part of the overall military procurement," Chu said.

But the academic and other experts agree that Chinese exporters are facing challenges in an increasingly complicated and globalized world.

Jin Canrong, vice president of the School of International Studies of the Renmin University of China, suggested Chinese companies should always be prepared in case of abrupt policy adjustments in other countries.

"Measures like increasing direct investment, promoting cooperation between state-owned and private companies, organizing a legal team specializing in international trade and speeding up the construction of free trade zones can help to soothe the pain of unexpected external changes," Jin said.