Disappointing first-half earnings growth at Chinese companies is a harbinger of gloomier news for the country's stock market, which is already the world's weakest performer this year.

Six-month earnings growth of 16 percent was below the 25 percent analysts had forecast at the end of the first quarter, and it relied heavily on tax cuts and currency appreciation rather than more sustainable sources of support.

Government monetary tightening, soaring raw material prices and a slumping stock market eroded corporate China's bottom line in the first half, with 1,618 listed firms posting a combined net profit of 540 billion yuan, or $79 billion, state media said.

"The main forces driving first-half earnings growth are really not a good omen, with yuan appreciation slowing since July and tax cuts ceasing to be a factor next year," said Qian Qimin, senior stock analyst at Shenyin & Wanguo Securities in Shanghai. "With monetary tightening steps adopted over the past year continuing to bite into earnings, commodity prices at high levels and China's economy slowing in line with the global trend, there's no doubt that profit growth will have more room to fall."

Six analysts polled by Reuters late last week gave an average forecast of 10 percent second-half net profit growth, down from 25 percent forecast in April.

Growth for 2009 is now estimated at a maximum of 10 percent, with the potential for a slight decline, according to the poll. That would mark a major pullback from a 23 percent rise in the first quarter, 43 percent in 2007 and 67 percent in 2006.

Flagging earnings growth has been a key factor weighing on the stock market, which late last month hit its lowest point since 2006 and has struggled to recover.

The benchmark Shanghai Composite Index closed down 3 percent on Monday, taking losses from the past year to 55 percent.

Analysts estimate that half of the first-half profit growth was due to a new unified corporate income tax rate for domestic and foreign companies starting this year, which cut the rate for local firms to 25 percent from 33 percent.

Banks were among the primary beneficiaries. More than a dozen listed banks posted average earnings growth above 70 percent, and their weight among all listed firms' profits doubled to 40 percent as earnings plunged at the energy giants PetroChina and Sinopec .

Industrial and Commercial Bank of China's first-half net profit jumped 57 percent, to $9.4 billion, exceeding $7.7 billion at HSBC Holdings, which is based in London, to make it the biggest-earning bank globally.