China produced 10.4 million motorcycles and sold 10.2 million in the first half of the year, up 38 percent and 35.8 percent respectively from last year, said a report released on Thursday by the China Association of Automobile Manufacturers (CAAM).

Analysts said the rapid development of the motorcycle sector has mainly resulted from the consumption tax reduction of motorcycles below 250CC from 10 percent to 3 percent, which came into force in April.

Due to increasing costs in the motorcycle sector, triggered by the rising steel price and the implementation of the Euro-2 emission standard, many small motorcycle manufacturers went bankrupt in 2005 and established ones channeled their capital into more profitable sectors.

Official figures show the export value of motorcycles made in Southwest China's Chongqing Municipality, which account for one third of the sector's production, increased by 42 percent to 512.1 million U.S. dollars in the first half of the year.

Source: Xinhua