Most Chinese firms see higher 2006 profit -survey

BEIJING, Apr 25 (Reuters) Nearly 80 percent of China's industrial firms expect higher profits this year compared with 2005, despite rising energy and raw material costs, a government report said on Tuesday.

Of the 10,875 companies jointly surveyed by the National Development and Reform Commission (NDRC) and the National Statistics Bureau, 7.9 percent expected annual profit increases of more than 20 percent this year, according to the report published on the NDRC's Web site (www.ndrc.gov.cn).

About 16.6 percent of the firms surveyed expected annual profit increases of between 10 percent and 20 percent, while 55.1 percent forecast gains of up to 10 percent, the report said.

Rising energy and raw material prices were the biggest headache for most manufacturers, the report said.

Other stumbling blocks included liquidity problems and slipping sales prices as a result of overcapacity in some sectors and intensified market competition, according to the report.

Keen to ease overcapacity in some sectors, the NDRC said in a separate statement that the authorities would take steps to prevent a rebound in spending in the aluminium sector, which has been targeted since 2004 as part of measures to cool investment.

Many aluminium producers had suffered losses due to falling prices as a result of excessive investment, it said.

China's industrial firms earned a combined 336.3 billion yuan (.9 billion) in profits in the first quarter, up 21.3 percent from a year earlier, the National Statistics Bureau reported on Thursday.

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