The Chinese government plans to introduce adjustments from 1 January 2014 to the way it calculates tax applied to imported cotton over-and-above its mandatory WTO-approved import quota of 894,000 tonnes.

Every year, the Chinese government decides whether it needs to import more cotton than this. And while that decision has yet to be made for 2014 - the government has decided that any additional cotton imports will attract more tax. An expert warns this could make cotton more expensive in China.

The WTO quota enters China at a small tax rate of 1%. However, a communiqué from the finance ministry explained that under the revised system, if the price of imported cotton equals or exceeds CNY15,000 (US$2,471), equivalent to about 111 cents per pound, a unit tax of CNY570 per tonne will be applied.

Under the 2013 system the threshold is CNY14,000. For cotton priced below CNY15,000 per tonne, a complex sliding scale will be used to calculate the tariff. Multipliers used in the sliding scale tariff have been revised upwards from previous years, the statement said.

"Basically, if you are importing at 95 cents on the pound you would pay CNY200 to CNY300 less under the old system," said Weng Chen, a trader with Ecom Trading in Shanghai.

However, he warned that it was not yet certain that China will allow an additional import quota at all, and might want to encourage textile manufacturers to buy Chinese cotton.

"A lot of people are reading into it that this means they will announce a sliding tariff quota later this year or in January. They might or might not," Chen said.

In previous years, China has typically allowed several thousand tonnes of fibre to be imported under a sliding tariff of between 5% and 40% tax.

However, doubts remain over whether it will continue the policy as it seeks to sell some of its 10m tonne stockpile of domestic cotton reserves.