EU Trade Commissioner Peter Mandelson made the announcement as he outlined details of the surge in cheap Chinese imports since the end of a quota system in January.
“Europe cannot stand by and simply watch these developments unfold,” Mr Mandelson said. “The time has come to take further action.”
“I urge China to take a fresh look at the measures they have put in place already, and explore whether they cannot do more.”
Mr Mandelson will recommend the European Commission investigate a massive increase in textile imports, which in some cases have leapt by more than 500 percent since the end of the global quota system.
The EU trade commissioner said he hopes to have results of the probe by June and that, if necessary, the EU will impose strict limits on Chinese imports.
Beijing has warned its relations with the EU could suffer if Brussels goes ahead with the ceiling on textile imports.
European have been divided on how to respond to the surge in Chinese imports.
The European Union’s textile trade, backed by producer countries such as France, Portugal and Italy, has been pushing hard for swift action on the issue, while Sweden, the Netherlands and Germany have argued against protectionism.
Under the terms of its entry into the World Trade Organisation (WTO) in 2001, China agreed members could cap imports of Chinese clothing and textiles at 7.5 percent above the level of shipments the previous year until 2008 — provided they demonstrate that their own firms are suffering.
China made 17 percent of the world’s textiles and clothing in 2003, but the WTO sees its market share rising to above 50 percent within the next three years.