As the price of cotton increases, producers of cotton cloth have fallen on hard times.

In Hangzhou's largest fabric wholesale market, the price of cotton material has increased at a rapid pace. During the first three days of October, the price increased by 5 percent each day. But wholesalers are not cashing in. Rather, business is tougher than before.

Store owner of Hangzhou Sijiqing Clothing Material Market said "It's hard to make money because buyers cannot afford it. With less buyers, we have to reduce our profit margins. Sometimes our margin is only 20 or 30 cents."

Store owner of Hangzhou Sijiqing Clothing Material Market said "This year we have made no money, we're just breaking even."

And it's not just at the wholesale level. Consumers too will have to pay more for cotton clothing as the price of its raw material increases. At Hangzhou's clothing market, the price of cotton clothing has risen by 10 to 20 percent in the second half of the year. A typical cotton shirt now sells for 78 yuan while the same item was sold for just 50 yuan last year.

One store owner said "This year the price of cotton clothing has increased a lot. The wholesale price for a cotton shirt is up by 5 or 6 yuan. Jackets less than two layers is up about 10 yuan. The price of cotton coat has gone up by around 18 yuan. The price is too high for us. And we are concerned that our customers can't accept the price either."

One store owner said "Clothing like this was 30 yuan last year, and now it sells for at least 35 yuan".

According to industry insiders, many factories are running out of cotton as a raw material. They say prices may rise even further by the end of the year.