China is studying further policies to help its textile sector cope with high costs and slowing demand, a ministry official said last week. 

The government increased tax rebates this month from 11% to 13% on several categories of textiles and garments to help Chinese manufacturers boost falling profits.

"Other policies being studied are the credit policy, fiscal policy, support for SMEs and the acceleration of independent innovation," said Zhu Hongren, chief of the operation monitoring and coordination bureau of the Ministry of Industry and Information Technology.

Speaking at a press conference on China's manufacturing sector, he added: "We believe that with the intervention of these policies and the commitment of local governments the problems will be solved gradually".

Exports of textiles and garments fell by 4.2% in June compared with the same period last year, the slowest trade in five years.

The strengthening yuan makes Chinese goods more expensive at a time when Western economies are slowing down.

Yet China's textile industry employs 20m people, with 80% from rural areas, said Zhu. A large number of cotton farmers are also dependent on the health of the industry. 

Zhu added, however, that the problems facing garment factories were "testimony to the fact that it has to restructure itself.

"The ministry also encourages companies to upgrade technology to improve its competitiveness".

By Dominique Patton.