It shattered the 20.6 percent growth rate for the whole of 2002.

The profits of State-owned industrial firms and firms in which the State holds a majority stake stood at 55 billion yuan (US$6.6 billion) for January and February, a year-on-year increase of 200 percent, the National Bureau of Statistics revealed in a statement.

Rising oil prices pushed the earnings of crude oil and natural gas producers 200 percent higher in January and February from a year earlier to 24.2 billion yuan (US$2.9 billion).

The sector alone accounted for more than 30 percent of all increases in profits in the industrial sector, the bureau said.

Transport profits increased by 6.57 billion yuan (US$791.5 million), while earnings from ferrous metal smelters rose by 4.84 billion yuan (US$583.1 million).

Producers of raw chemical materials and oil processing firms also reported sharp rises in profits.

Wang Zhao, from the State Council's Development Research Center, said the strong profit growth was a result of the country's pro-active fiscal policy and sound monetary policy.

"The high return rate of investment will stimulate further investment, a key factor for the country's economic development," he said.

Zhang Xueying, a senior economist with the State Information Center, said the growth in profit was a clear indication that the Chinese economy was developing in a healthy way.

"The strong growth was reasonable and the trend will continue in the coming months, propelled by strong demand from both home and abroad," Zhang said.

But Tang Min, chief economist with the Asian Development Bank Resident Mission in China, said the lofty growth was influenced by seasonal spending.

"The figures for the first two months do not reflect the real situation for industrial firms as there were factors such as Spring Festival, when many people spent a lot," he said.

Tang said the profit rate would not be maintained throughout the year.

(China Daily March 27, 2003)