The report said that economic cooling measures, industrial overcapacity and rising materials costs would start to have an impact next year.

The combined earnings of China's top 200 listed companies rose 20.8 per cent in 2005, compared with 46.5 per cent in 2004, according to the report.

Of the 200 companies surveyed, 59 per cent reported higher earnings last year, while only 9 per cent recorded losses, according to the report.

The nation's top 10 listed firms accounted for 70 per cent of combined earnings of the 200 companies.

China's top three oil and gas companies accounted for 45 per cent of the overall net income of all the companies surveyed.

But the report, China's Leading Corporate: The Top 200 Performers, warned that while earnings were strong in 2005, earnings momentum is likely to temper off in 2007 as the government's recent macroeconomic controls, overcapacity and rising material costs have an impact.

The report said the government's recently introduced macro-control measures ranging from monetary tightening to the land use policy are likely to limit growth, although "not to a damaging extent."

It also warned that high input costs and increased price competition due to overcapacity will cause more margin compression for some downstream sectors.