China's biggest cotton textile manufacturer, Weiqiao Textile, predicts it will halve its gearing in the next two years as new production capacity pushes up revenue.

Weiqiao believes considerable investment is needed because itis going through a phase of fast expansion.

The group said it had 1.414 billion yuan at the end of June, and that capital spending was predicted to reach approximately 3 billion yuan in 2004.

Weiqiao posted a 50.4 per cent growth in profits for the first six months of 2004, to 356.8 million yuan.

Turnover increased 75.5 per cent to 4.578 billion yuan.

The company's gross profit margin dropped to 18.2 per cent from 20.4 per cent in 2003.