Chinese enterprises improved their profitability in the first half, compared with the past two years, but rising costs remain a major challenge, according to a survey released Saturday.

The survey by China Entrepreneurs Survey System (CESS) found that 67.9 percent of Chinese enterprises made a profit in the first half, 16.5 percentage points higher than the figure for last year and 5 percentage points higher than 2008.

Meanwhile, 17.3 percent of Chinese firms made ends meet while 14.8 percent reported losses, said the CESS survey.

The survey indicated business conditions were gradually recovering to levels before the global financial crisis due to healthy order books and normalized inventory levels.

The survey found enterprises in mining, construction, transport, storage, computer services, software, hotels and catering and telecommunication equipment manufacturing were enjoying good profitability.

However, rising costs of labor and raw materials were singled out by most company managers as the biggest challenge.

Other difficult conditions mentioned by entrepreneurs included a lack of skills, the heavy burden of tax and social security, and financial strains.

(Xinhua News Agency November 14, 2010)