China, the world's biggest cotton user, may sell about 1 million metric tons from stockpiles and release 400,000 tons of import quota to help textile companies cope with increased raw material costs and weak export demand, said Dong Shuangwei, an analyst at Beijing Capital Futures Co.

The government would sell the inventories at a discount to the price it paid farmers last year, Dong said. That price was 19,800 yuan ($3,115) a ton, according to the China Cotton Association's website. The country spent about 60 billion yuan buying 3.13 million tons of local cotton in 2011, about 40 percent of its crop, to boost farmers' incomes.

Cotton traded in New York has declined 28 percent in the past year while local cotton on the Zhengzhou Commodity Exchange declined 10 percent.

Textile companies in China, the biggest maker, suffered because they have to compete with producers in other countries where prices are lower, according to Weiqiao Textile Co, the largest manufacturer.