The cotton growing area in China in the 12 months is expected to decline to 63.40 million mu (about 4.23 million hectares), down 9.4 percent from the previous year, and the cotton yield is also forecast to plunge by half a million tonnes to 6.5 million tonnes, according to Lian Weiliang, deputy head of the National Development and Reform Commission.

While, cotton demand in China is expected to exceed its domestic supply by two million tonnes in the year from September 2014 to August 2015, as per official data showed on Thursday.

The gap is double that of the same period last year, according to a video conference jointly held by a number of Chinese government ministries and departments.

Due to rising cost and falling profitability of cotton growing and the government's abolition of its "temporary purchasing policy" to hold up prices, the cotton growing area in the Yangtze River Basin and the Yellow River Basin has dropped by a "relatively big margin.

Lian called for a new purchase and sale mechanism for cotton, the introduction of a "nationwide modern logistics system" for the material and boosted yields through better technology, as measures to fill the demand-supply gap.

As Chinese textile industry is recovering from its decline in 2013, the demand for cotton is expected to increase by half a million tonnes from the previous year to 8.5 million tonnes, said conference delegates.