According to a report published by China’s National Development and Reform Commission (NDRC), the country’s textile industry will start to lose money if the yuan continues to appreciate.

"With their average profit margin currently at 3%, textile companies will no longer be able to absorb the cost of the rising yuan," said the report. This warning follows market forecasts that the yuan would appreciate by 3% against the $ to 7.72 over the next twelve months.

Chinese textile manufacturers have been marking down their prices this year to sustain their exports and offset the negative impact of the rising yuan.

The growth rate of China's textile exports has slowed but its textile exports still rank the world's largest. From January to July, its textile exports reached $7,051 million, up 18.7% compared with the previous year. The growth rate is 4.3% lower than the previous year and 3.1% lower than in January.