China's industrial output expanded 10.7 percent in June from a year earlier, faster than the 8.9 percent rate in May, the National Bureau of Statistics (NBS) said Thursday.

It is the first time since last September that the output reached double-digit growth after China launched the 4-trillion-yuan (588.24 billion U.S. dollars) stimulus plan and scrapped lending restrictions to boost the economy.

"The industrial production is accelerating, and the profit drop is easing," said Li Xiaochao, spokesman of the NBS at the press conference.

The industrial output growth rise to 7 percent for the first half, down 9.3 percentage points from the growth rate of the same period last year, said Li.

The figure rose to 9.1 percent in the second quarter from 5.1 percent in the first quarter, said Li.

Large industrial enterprises (those with annual revenue of more than 5 million yuan) made an aggregate profit of 850.2 billion yuan during the first five months, down 22.9 percent year on year, said Li.

Experts attributed the stabilization of the industrial sector in the first half to de-stocking process, which refers to a cut-down on inventories and spending.

"Industrial production is recovering, but it is yet unclear whether the trend is sustainable, for the consumption end has not improved," said Fan Jianping, chief economist with the State Information Center.

Light industry, which includes garment manufacturing and home appliance manufacturing, grew by 8.2 percent in the first half, compared with 6.6 percent of the heavy industry, said Li.

The subsidization of home appliance sales in rural areas, higher tax rebates for some export products and larger taxation and credit support to exporters effectively eased the impact of the economic downturn on light industry, according to a report released by the industry research institute under the National Development and Reform Commission.

The growth of heavy industry could be attributed to accelerated investment, higher auto sales, and recovering raw material prices, said the NDRC research report.

The industrial output in western China saw a major gain of 13.2 percent, against 5.9 percent and 6.8 percent in eastern and central China respectively, said Li.

The sales ratio of industrial products for the first half was 97.2 percent, showing a well-connected chain from production to sales.

China's power consumption also ended a downward trend and reported a year-on-year growth of 3.79 percent to 305.22 billion kilowatt hours in June, according to the China Electricity Council (CEC).

Economic slowdown has sapped China's power use since October last year as the global downturn took a toll on the country's economy.

The economic data showed that central government policies are "correct, timely and effective," said Li.

But he noted that excessive output capacity remained a major problem for Chinese industry.

"In the first half, our major task is to boost economic growth. But in the latter half, more emphasis should be given to upgrading industrial structure. Otherwise the development would not be sustainable," said Zhuang Jian, senior economist with Asian Development Bank.

(Xinhua News Agency July 16, 2009)