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Introduction In 1995, China had about 54,000 textile and clothing factories, of which more than 90% were small-and medium-sized enterprises (SMEs). They are organised either by the China National Council of Textile Industry (which is being restructured into the State Textile Industry Bureau) or by the local textile industry co-operatives (state-run organisations) at both municipal and provincial levels. China's textile industry is mainly based on both natural fibres, such as cotton, wool, jute, mulberry worm silk, hair, etc., and synthetic fibres. Some 80% of the fibre used is cotton, so cotton China's textile manufacturing and employment. In general, the employee number of SMEs falls into a range of 100 to 2000. In 1995, the whole industry employed 12.43 million employees and the total value of output was 703.5 billion yuan RMB. China is the world's largest producer of cotton clothing, and the second largest producer of synthetic fibres. China is therefore one of the most important producers and exporters of clothing and textiles in the world. Technical and Equipment Level The technology and techniques used in China's textile industry are, for most SMEs, at the level of the Europe-American textile industries in the