National Development and Reform Commission (NDRC) has projected that if currency appreciation of China continues, the textile industry will start to lose money as their profit margins are pegged at three percent right now.
This prediction came on the sidelines of Yuan hitting a new high against US dollar since its revaluation just a year ago.
Reference rate for RMB against greenbuck was set by bank of China at 7.9499 on Monday, which is a record since China allowed its currency to be appreciated by two percent in July last year.
Sun-Bae Kim, the Economist from Goldman Sachs has predicted that Yuan would rise six percent in 12 months. NDRC report fears that if the appreciation continues, the profit margins of textile companies would vanish rather quickly.
Report mentioned the research by Guotai Jun'an Securities Research Institute which said that one percent Yuan appreciation will lead to loss of two percent in profit margins. It further predicted that sectors such as cotton, wool and fabric would see the slide up to six percent.
Export from China to US reached US $27 billion, an upswing of 18.7 percent and is still the biggest exporter even though the growth rate has declined.
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