Shandong Province in eastern China, one of the country's top three textile producers, reported that its textile industry generated profits of 600m yuan ($72m) during the first half of the year, a year-on-year increase of 165 per cent.

Combined sales of all major textile enterprises in the province amounted to 14.5bn yuan ($1.7bn) in the January-June period, up 34 per cent.

Experts attributed the upward trend to a massive national programme to restructure the industry, which had suffered losses for years.

Official figures indicate that by the end of last year, China had cut down its textile production capacity by scrapping 9.06 million outmoded spindles, ending the industry's five-year streak of operating in the red with a net profit of 800m yuan ($96.3m) in 1999.

Shandong has so far reduced its total number of textile enterprises from 346 to 224, with its outdated spindles decreasing by 810,000.

Liaoning Province, China's largest industrial base, increased its textile sector's gross industrial output by 17.5 per cent to reach 4.02bn yuan (over $484m) in the first half of this year.

Eleven textile enterprises among the 15 most-indebted ones have reduced their deficits by 11.17m yuan (about $1.35m).

The economic momentum sustained last year's recovery, which showed profits totaling 21m yuan, following nine straight years of losses in the sector.

The Liaoning Economic and Trade Committee attributed the recovery of the chronic low-efficiency industry to overall capital recombination and structural readjustment. A total of six large enterprise groups have become the mainstay of the local textile economy since deficit-ridden cotton textile plants with a total of 439,000 spindles were closed down during the past two years.

A total of 120m yuan (about $14.5m) has been allocated by the provincial government this year to set up 11 high tech textile projects. Moreover, local textile enterprises have introduced $17.32m of contractual foreign investment in the first six months of this year, up 30 per cent over the same period of last year.