BEIJING - China will not increase its cotton import quota next year beyond the 894,000 tons ?quota it promised when joining the World Trade Organization, a Chinese official said Monday.

"We will guide domestic textile enterprises to use more homegrown cotton," Liu Xiaonan, an economic and trade official with the National Development and Reform Commission (NDRC), said at a press conference.

The official's remarks came after the government removed its long-held temporary cotton purchasing policy and introduced a target price system for homegrown cotton this year.

Under the target price system, the government will subsidize farmers to ensure their earnings when market prices fall below a preset target price, which was set by the NDRC at 19,800 yuan ($3,220) per ton in April.

Currently, the domestic price of ginned cotton stands at about 14,000 yuan per ton, compared with about 11,800 per ton on the benchmark US futures market.

Liu expected the price difference on the domestic and international markets to narrow to a "reasonable range," which would help reduce imports of cotton yarn.

He said domestic cotton output will reach 6.5 million tons this year, down 500,000 tons from the previous year, while demand will be around 8.5 million tons, resulting in a supply gap of 2 million tons.

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