The specific way in which bamboo fabric is produced is mostly kept secret however here is the basics:
Bamboo fiber fabric production flow:
bamboo - thick pulp - fine pulp - bamboo fiber - bamboo yarn - fabric.
From what we have been able to find in most bamboo fibre production there is bleaching in the process to get the fibre to a more useable state.
As far as the harmful chemicals in the fabric, I'm not sure to what extent there would be any. I'm sure the vast majority of bleaching agents would be removed as in when people use bleach in the home and then wash their clothing. This is one of the reasons why bamboo cannot yet be certified organic, despite what many websites say.
It is still a much more sustainable fabric than cotton due to not needing chemicals to grow or anywhere near as much water and better crop in terms of long term sustainable production. hemp is probably the most sustainable but it has its negatives in terms of holding the wee smell and being a coarser fabric(unless like bamboo some form of bleaching is used).
hth
