Fu, head of the region's biggest refiner, noted that overcapacity also is rampant in small, local refineries, which suggests the government should call for the elimination of outdated ones.

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He said there are about 100 small-sized oil refineries with an annual capacity of less than 2 million tons in some parts of China. With their relatively low competitiveness, they are adding to the nation's surplus capacity.

Experts said the excess refining capacity not only makes market competition more fierce, but it also is wasteful.

Making the picture worse is the fact that China, the world's biggest net importer of oil and a leading buyer of petrochemicals, also is facing surplus capacity in chemicals, Fu said.

China's chemical industry has grappled with overcapacity for a long time. But this year will be the sector's toughest in quite a while.

Fu said consumption in the chemical industry is growing by 4 to 5 percent each year, with prices dropping sharply. He said he hoped that export tariffs could be lowered to give chemical producers a competitive edge in the global market.

During the first quarter, prices of chemical products slid, pushing industry profitability to its lowest level since the second quarter of 2009.

"We need to promote a healthy industry, one not built up by injections of money," Fu said.

Yao Jing contributed to this story.

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