General Motors plans to invest more than $3bn in China

GM said it sold 308,722 vehicles in the first six months of 2005, up 18.9% on the previous year.

The carmaker expanded its share of the Chinese market - GM's second biggest after the US - to 10.9% in June.

Volkswagen has seen its dominance in China slip from about a quarter of the market to an estimated 13% to 20%.

Solid profits

Despite soaring growth which is still the envy of much of the world, analysts say margins in China's car market have been hit recently by price cuts, competition and the high price of steel.

"China continues to be a very solid profit contributor," said Kevin Wade, GM's boss in China.

"It's natural for margins to compress as markets get more mature and more competition comes in. It's our responsibility to find ways to offset that."

GM plans to invest more than $3bn (�1.7bn) with its partners in China, with the aim of doubling the number of vehicles it produces in the country to 1.3 million by 2007.

The company made profits of $417m in China last year, just $3m higher than in 2003.

Last week, Japanese carmaker Honda said the first shipments to Western Europe of its Chinese-made Jazz small car would arrive later in July.

Separately, China's business confidence index fell 7.4 points to 128.5 points in the second quarter of the year, the country's National Bureau of Statistics reported.