First-half revenues of China's major industrial companies saw a steady recovery, yielding almost 67 percent year-on-year surge in their combined profit, but private enterprises and smaller firms still face big challenges in their attempts to grow their profits, officials and industry experts said on Tuesday.

Data from the National Bureau of Statistics showed that first-half profits of industrial firms with an annual business turnover of at least 20 million yuan ($3.09 million) totaled 4.22 trillion yuan, up 45.5 percent from the corresponding figure of 2019, the last pre-COVID level.

This meant the two-year－2020 and 2021－average of first-half year-on-year profit growth was 20.6 percent, NBS data showed.

Profits of upstream companies engaged in mining and raw material supplies have increased 1.33 times and 1.83 times year-on-year, respectively.

Together, the two types of companies contributed to 58.9 percent of the total industrial profit growth during the period.

"As the national economy grew steadily with sound momentum in the first half, the demand for industrial production continued to recover. Therefore, major businesses saw continued improvement in operations and rapid growth in profits," said Zhu Hong, a senior NBS statistician.

However, Zhu highlighted that imbalances still exist. Profit growth of small and micro businesses lags that of medium and large ones, while profit growth of private firms is also lower than that of major industrial firms.

"Commodity prices continue to run at a high level, which squeezed the profitability of enterprises. Also, there are shortcomings in the supply chain of the overall industrial chain," she said.

In a livestreamed speech to a conference in Changsha, Hunan province, on Tuesday, Vice-Premier Liu He stressed the importance of small and medium-sized companies in driving the country's economic growth.

Liu said China's economy will be in good shape if SMEs remain sound. In economic circles, it is accepted wisdom that if a place develops SMEs well, then its economy will also maintain momentum. So, China will firmly support the development of SMEs, he said.

Shi Yinghua, director of the Research Center for Macroeconomics, which is part of the Chinese Academy of Fiscal Sciences, said that smaller businesses tend to become vulnerable while facing external pressures like the current surge in commodity prices, thereby more targeted efforts are needed to relieve the challenge in the coming months.

"There was a modest improvement in investment appetite among SMEs in June, though this remains below the pre-pandemic levels. It also shows continued weakness in the appetite for business expansion, suggesting that businesses are not planning for spikes in demand," said Shen Lan, an economist with Standard Chartered China.

"On the global trade front, while the overseas orders of Chinese SMEs have continued to be impacted by the coronavirus, the pace of the decline has slowed," she said.