The four highlights are:

1. Self financing is the most important factor to drive profits growth.

China's industrial profits swelled 42.1 percent from last year's figure to 902.6 billion yuan (US$119.08 billion) in the first five months of this year.

So far in 2007, a total of 4.03 trillion yuan has been invested in urban areas, up 23.7 percent year on year.

From January to May this year, capital raised via self financing, overseas capital, and domestic loans grew 29.2 percent, 16.6 percent and 14.1 percent respectively year on year.

Related readings:  Macro economic climate index stable in May  Industrial-company profits climb 42% in 1st 5 months  Fixed-asset investment up 25.5% Investment grows 26% in first half year

Zhu Baoliang, chief economist of the Department of Economic Forecast of the State Information Center, said that self financing is the most important factor in the growth of enterprise profits.

The shift in enterprise financing means that the government must use new macroeconomic control measures to cool down investment growth in addition to its current monetary policies, which are used to tighten credits.

2. Due to the growing gap between heavy and light industries, the situation is not conducive to saving energy and reducing the emission of pollutants.

Fixed assets investment in urban areas surged 25.9 percent year-on-year to 3,204.5 billion yuan between January and May.

The rapid growth was mostly due to surging investment in energy intensive and real estate sectors.

The growth rates of heavy industries are far higher than those of light industries. The added value of heavy industries in May increased by 18.89 percent, or 1.89 billion yuan, from the same month a year earlier, while the added value of light industries in the month grew 15.9 percent year on year, signaling heavy industries were the major contributors to investment growth.

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