BEIJING -- China produced 10.4 million motorcycles and sold 10.2 million in the first half of the year, up 38 percent and 35.8 percent correspondingly from last year, said a report exposed on Thursday by the China Association of Automobile Manufacturers (CAAM).

Analysts said the rapid growth of the motorcycle sector has chiefly resulted from the consumption tax decrease of motorcycles below 250CC from 10 percent to 3 percent that came into force in April.

Due to increasing costs in the motorcycle sector, activated by the rising steel price and the completion of the Euro-2 emission standard, many small motorcycle manufacturers went insolvent in 2005 and established ones channeled their capital into more profitable sectors.

Official figures show the export value of motorcycles made in Southwest China's Chongqing Municipality that account for one third of the sector's production, augmented by 42 percent to 512.1million U.S. dollars in the first half of the year.