China's industrial companies made profits of 143.8 billion yuan (US$17.3 billion) during the first two months of this year, an increase of 38.2 percent compared with 2003, the National Bureau of Statistics said Tuesday.

Profits by State-owned industrial firms and firms in which the State holds a majority stood at 78.5 billion yuan (US$9.5 billion) during the period, a year-on-year increase of 37.9 percent.

Industrial enterprises handed in 132.1 billion yuan (US$15.92 billion) of taxes to the State, a year-on-year increase of 21.3 percent.

During the first two months, sales income earned by industrial firms reached 2.33 trillion yuan (US$281.5 billion), an increase of 28.6 percent.

Net losses suffered by money-losing companies reached 29.3 billion yuan (US$3.5 billion) during the period, an increase of 6 percent over 2003.

Zhu Jianfang, an economist at China Securities, said the good performance of the industrial sector was mainly due to the country's fast fixed asset investment.

China's fixed asset investment grew a year-on-year 53 percent during the first two months.

Powered largely by the 26.7 percent growth in fixed asset investment last year, the country's gross domestic product grew 9.1 percent in 2003.

"The country's fixed asset investment will continue to grow at a high speed in the coming month, which will help bring more profits to these companies," Zhu said.

Statistics bureau spokesman Yao Jingyuan said the good industrial performance can also be attributed to the upgrading of the domestic consumption structure, the adjustment of the industry structure and fluctuations in international prices.

Profits by a majority of industrial sectors continued to grow rapidly during the two months, according to the bureau.

Five major groups including ferrous metal producers, chemical producers and electrical power producers accounted for 60 percent of the increased profits for the entire sector, it said.

The State Information Centre has predicted that the country's economy will grow by 8.5 percent this year.

And Qiu Xiaohua, deputy commissioner of the statistics bureau, says he is confident that the Chinese economy will grow at a higher rate in the coming decade.

Along with a deepening of reform, market vitality will strengthen, he said.

The micro base for the current economic development has also been improving, as entrepreneurs and consumers have shown increased confidence in the future, Qiu said.

The new growth areas within the economy resulted in continuous structural expansion, he said.

The formation of the Pearl River Delta, Yangtze River Delta and Bohai economic zone, the revival of the old industrial base in China's northeast, and the further development of the high-tech industry and service sector will all inject new vigour into economic development in the future.

(China Daily March 24, 2004)