China's industrial companies earned profits of 363.8 billion yuan (US$43.8 billion) during the first half of this year, an increase of 131.7 billion yuan (US$15.9 billion) or 56.7 per cent compared with a year ago, the National Bureau of Statistics said Thursday.

The profit growth, which was slower than the 62.8 per cent rise between January and May and the 94.3 per cent surge in the first quarter, is still much faster than the 20.6 per cent rise recorded for the whole of 2002.

Profits made by State-owned industrial firms and firms in which the State holds a majority share totalled 186 billion yuan (US$22.4 billion) during the period, a year-on-year increase of 77.4 per cent, the bureau said in a statement.

Industrial enterprises handed in 335.3 billion yuan (US$40.4 billion) of taxes to the State, a year-on-year increase of 18.2 per cent.

During the first six months, sales income earned by industrial firms reached 6,237.3 billion yuan (US$751.5 billion), a year-on-year increase of 27.3 per cent.

Companies in the red lost a net amount of 63 billion yuan (US$7.6 billion) during the period, a drop of 3.8 per cent compared with a year ago.

Yao Jingyuan, chief economist at the bureau, said the whole industrial sector's strong performance was partly due to the rapid growth in fixed asset investment.

Fixed asset investment rose a year-on-year 31.1 per cent to 1,934.8 billion yuan (US$233.6 billion) during the first half of this year.

Industry's healthy profits were also attributed to the upgrade of domestic consumption structure, industry restructuring and price changes on the international market, said Yao.

He said most sectors in this area increased profits during the January-June period.

Crude oil and natural gas producers earned 32.2 billion yuan (US$3.9 billion) more during the first six months of this year compared with a year ago.

And the transport sector, including automaking, returned 20.2 billion yuan (US$2.4 billion) more in profits, while ferrous metal smelters boosted their earnings by 14.9 billion yuan (US$1.8 billion), Yao said.

Profits of chemical raw material companies rose 8.8 billion yuan (US$1.1 billion), while earnings from electricity producers increased 6.6 billion yuan (US$795 million).

The crude oil, natural gas, electricity, ferrous metal smelting, chemical raw materials and transport sectors accounted for 62.3 per cent of the profit growth across all industries, Yao said.

Wang Zhao, a researcher with the State Council's Development Research Centre, said the fast profit growth suggests the Chinese economy is developing smoothly.

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