The output value of China's environmental equipment industry rose 31.64 percent year-on-year to reach 130.46 billion yuan (20.71 billion U.S. dollars) in 2011, the Ministry of Industry and Information Technology said Wednesday.

The sector's sales climbed 31.09 percent from one year earlier to reach 126.89 billion yuan last year, while profit margins increased 0.3 percent to hit 7.53 percent, the ministry said in a statement on its website.

Exports rose 25.66 percent to 5.08 billion yuan, while fixed asset investment jumped 36.68 percent to 23.9 billion yuan.

Despite an improvement in profitability, the industry still struggled with rising raw material and labor costs, as well as capital shortages, according to the statement.

The ministry said it expects the output value of the environmental equipment sector to increase by over 20 percent this year with increased capital support from the government.

Sales of wastewater, refuse and mud treatment facilities are expected to rise sharply in 2012.

Meanwhile, the air monitoring equipment sub-sector will likely grow rapidly this year with the implementation of stricter air quality standards, according to the statement.

However, the ministry warned of a slowdown in export growth due to rising trade protectionism and sluggish global economic recovery caused by the ongoing debt crisis in Europe.

China targets to raise the output value of its environmental equipment industry to 500 billion yuan by 2015, according to the 12th Five-Year Plan for the Environmental Equipment Industry released by the ministry in early March.