The ‘International Fiber Journal’ recently quoted the report by Wuhan Science and Technology University predicating that China's chemical fiber industry will remain in a situation of excessive capacity before 2008. This situation has continued more than two years. China is the world's largest producer of fiber production and China’s excessive capacity has become an indisputable fact.

According to the statistics in March 2005, the operation rate of China's chemical fiber industry dropped to 65-70 percent. Some manufacturers were squeezed out of the trade, production lines stopped, equipments were sold out.

Due to continuous investment, China's chemical fiber production already reached 14.2 million tons in 2004, and further increased more than 2 million tons in 2005, accounting for 42.8 percent of the world's total chemical fiber output.

Processed chemical fiber output was 17.1 million tons, accounting for 65 percent of the total processed domestic textile fiber.

Chemical fiber textile and apparel exports earned US $45.35 billion, accounting for 36 percent of the total export amount of textile industry.

Chemical fiber and downstream processing industry have become the main foreign exchange-earning sector in textile industry.

One of the major causes of excessive production capacity is the rising cost of raw materials, in addition to new equipments.

In the past two years, the performance of chemical fiber industry was less satisfactory, which fell into its ninth lower period since 1975.