BEIJING, March 29 - Any appreciation in the yuan will deal a heavy blow to China's powerful textile sector, an industry association official said.

Chen Shujin, a vice-president with the China National Textile and Apparel Council, said there might be "massive bankruptcies" in the industry if the currency were to strengthen again.

"If the yuan appreciates, exporting companies will face hard times. The impact will be very serious and cause massive bankruptcies," Chen told reporters on the sidelines of a conference on Monday.

Chen said the profit margin in the sector, which employs millions of people, was 4 percent on average.

"A one percentage point rise in the yuan will erode our margin by one percentage point -- that's really tough."

Beijing has effectively pegged its currency to the dollar since mid-2008 to cushion exporters from the financial crisis, a policy that has come under growing fire from Washington, where lawmakers have threatened punitive duties against Chinese products.

Most economists have said they believe the yuan is undervalued, which they say gives China an unfair price advantage in trade. However, estimates of the degree of undervaluation range widely.

Economists polled by Reuters said they expected Beijing to let the yuan resume its appreciation in the second quarter but to keep its currency on a short leash, allowing a mere 3 percent rise over the next 12 months.