The whole industry will lose strength in overseas markets if the yuan rises too much, the Beijing Morning Post said, citing a statement from the National Development and Reform Commission, the top planning agency.

A growing number of anti-dumping cases against Chinese textiles filed by trading partners also makes conditions tougher for the industry, the statement said.

It said the average profit margin of the textile sector was under 3.7 percent, or about two thirds of the average national industrial profit margin.

Analysts say domestic markets will become more important for Chinese textiles as the export environment deteriorates, according to the Beijing newspaper.

Profits in the textile industry totalled 88.3 billion yuan (11.4 billion dollars) in 2006, the statement said.