"Major problems that are colluding to ail the industry still loom large, such as the appreciation of the yuan, domestic cost inflation and drooping demands from overseas," Gao said. "The downward trend in the sector will therefore only embrace a cushion, but not a reversal."

No easy remedy

Most textile enterprises have tepidly received news of the tax rebate policy adjustment, according to a report in the Guangzhou-based Yangcheng Evening News. Wang Yongli, Vice General Manager of the Guangdong Silk-Tex Group Co. Ltd., told the newspaper that his company could now receive an additional 0.13 yuan ($0.019) on every $1 worth of exports, but that the amount was still too low to offset its surging costs.

"That would at best count as a short-term respite from losses as concerns over the currency appreciation and sluggish consumption of the United States still linger," Wang said. "The country's textile exports still face dark prospects."

Gao echoed Wang's opinion, saying that the tax rebate increase could hardly defy the overwhelming factors that are dragging down the textile sector. Zhao Meiling, an analyst at Essence Securities Co. Ltd. told Beijing Review that while the annual profits of the country's textile sector could increase by 6.165 billion yuan ($902 million), they would have to be shared by more than 80,000 manufacturers.

Cost conundrum

Wang Yu, Vice Director of the China Chamber of Commerce for Imports and Exports of Textiles, said rising labor and material costs resulting from the strong yuan were the biggest factors hurting the textile sector.

Because it usually takes a quarter year for orders to be shipped after they are placed, Chinese exporters usually suffer considerably as the yuan further appreciates and affects payment settlements, Wang said. The exporters also may see their profit margins, which usually average at 3 percent, turn negative when they receive payments, he said. This is why many of them have declined to accept any orders since the latter half of last year, he added.

Wang cited the China Import and Export Fair (Canton Fair), held annually in Guangzhou in south China, as an example. The fair used to register the most textile export contracts of the country. But in the last two years its contract volume has been shrinking and many exporters have not participated, Wang said.

Financing cost is another sore plaguing the textile sector, Wang said. The central bank's interest rate hikes have made it harder for textile enterprises to get financing. The gloomy stock market and constraints on initial public offerings and refinancing also have turned them off from the securities market, he said. There are currently only 12 listed textile enterprises on the country's stock exchanges, nine of which have reported wilting gross profit margins, he added.

Besides this, wage increases and the rising prices of transportation, electricity and water also have been putting pressure on the industry, Wang said.

Self-rescue

The favorable tax rebate policy could temporarily help textile exports, but a downward trend in the whole sector would be irreversible, Sun Huaibin, Director of the Press Center at CNTAC, said in an interview with Beijing Review.