"A minimum price system will be adopted under which textile exporters who sell their products at a price lower than that stated in the system would be punished," Wang Shenyang, director of the China Chamber of Commerce for the Import and Export of Textiles, was quoted as saying by the China Securities Journal.

The severest penalty for a violator would involve filing a complaint with the state industry regulator to terminate export licenses, Wang said.

Tighter controls over certain textile products categorised as "sensitive" were also needed if China was to avoid anti-dumping investigations abroad, he said.

The report did not say when the rules could take effect.

Chinese textile exporters, already a global powerhouse which accounted for 17 percent of the world's textile and clothing market in 2003, could grab some 50 percent of the market within three years as trade barriers come down.

On January 1, the multifibre agreement (MFA), which had allocated quotas of clothing and textiles for 30 years, was dismantled.