China's output of mobile phones soared 27.9 percent year-on-year in the first eight months of 2007, boosted by expanding rural markets.
The handset output reached 347.6 million units in the eight-month period, according to the department of the economic system reform and economic operations under the Ministry of Information Industry (MII).
The huge increase came as the companies designed low-priced handsets to cash in on the rising demand of more rich rural residents, the MII said.
It forecast the country's output would account for 40 percent of the more than 1 billion units of global handset shipments this year.
The handset producers need to boost research and development, improve products quality and after-sale services to nurture their brands as the poor performers will be finally eliminated in the industry's restructuring, the ministry warned.
China's phone subscribers hit 885 million by the end of August, and more than 515 million of them, or 58 percent, were mobile phone users, according to statistics from the MII.