CHINA'S ship-building industry, the world's second-biggest by tonnage, has tripled profit margins over the past three years.Yards have boosted output under a plan to leapfrog South Korea for the No. 1 spot.

Profitability at China's largest yards, including China State Shipbuilding Corp, the biggest, widened to 10 percent of sales last year from about three percent in 2003, said a person who compiles statistics from the yards for the China Association of the National Shipbuilding Industry.

South Korean yards grabbed almost half of last year's orders for new vessels in a global market that rose to a record US$105.5 billion, according to Clarkson Plc, the world's biggest ship broker.

China's builders, which produced about a fifth of global tonnage last year, overtaking Japan after nine months, plan to double output through 2015 and develop technology to take the lead. They've achieved more efficiency gains over the years because of R&D and efforts to upgrade technology, and they're now reaping the benefits.

China's ship-building industry produced 172 billion yuan (US$22 billion) worth of ships last year and made 9.6 billion yuan in profit.

At government-controlled China State Shipbuilding, which accounted for 40 percent of the country's output, profit last year exceeded five billion yuan. The yard took 100 billion yuan worth of new orders last year, or more than half of China's total, the company said on its Website on December 31.

At Guangzhou Shipyard International Co, a unit of China State, profit more than doubled from 98.2 million yuan a year earlier amid a "consistently bullish" market, the company said on January 25. Its profit margin in the first nine months of 2006 was 7.2 percent, compared with 4.9 percent in 2005, 2.6 percent in 2004 and 1.1 percent in 2003.