China's machinery industry reported record-breaking profits last year, with profits growing 36 percent year on year, three times faster than in 2005, said the China Machinery Industry Federation Friday.

With total profits of 297 billion yuan (37 billion U.S. dollars), the machinery sector was a major contributor to the country's industrial profits last year, said Cai Weici, executive vice president of the federation.

Profits at state-owned producers soared 38.5 percent from 2005, growing faster than at private firms and joint ventures, according to the federation.

"With the Chinese economy growing at a brisk clip of 10.7 percent year on year in 2006, there was a strong demand for machinery products, which other industries need," said Cai.

The industry recorded much slower profit growth in 2005 due to price hikes in raw materials like steel products, but a stable supply of raw materials helped the growth rate rebound last year, he said.

He anticipated the industry's profits will increase by 20 percent this year from 2006.

"Domestic demand for machinery products will weaken this year as the government tightens curbs on fixed-asset investment," said Cai. "But a stronger demand for energy-efficient and environmentally friendly equipment will bring new business opportunities."

Output of machinery products in China exceeded 5 trillion yuan last year, over 30 percent up on 2005, data from the federation show.

Source: Xinhua