China is expected to produce 400 million mobile phones in 2006, half of the world's output, said a source with the Ministry of Information Industry.

In the first half of this year, China churned out 210 million mobile phones, up 64 percent over the same period of 2005, and the country's mobile phone export volume hit 13.3 billion U.S. dollars, China Youth Daily reported on Tuesday, quoting Wang Bingke, deputy director of the ministry's Economic System Reform and Operation Department.

However, Wang said the rapid development of China's mobile phone industry also meant tough competition in the sector in the future, as foreign-invested mobile phone enterprises have shifted their export focus from the high-end market to the middle and low-end markets to compete with Chinese enterprises.

China now has 420 million mobile phone subscribers and the number of subscribers increased by over 30 million from January to June this year.

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