Sales of mobile phones in China increased 40 percent year on year to 120 million units in 2006, said Xie Linzhen, deputy chief of the China Mobile Communications Association.

Xie said China has become one of the world's largest handset markets, adding sales will likely surge 25 percent to 150 million units this year.

In 2006 China produced a total of 450 million mobile phones, of which 350 million were exported, he noted.

According to the Ministry of Information, foreign mobile phone giants including Nokia and Motorala hold the lion's share of the market, while local mobile phone makers sold only 50 million units on both the domestic and overseas markets.

Xie added global mobile phone sales climbed 25 percent last year with total shipments reaching one billion units. Worldwide sales are expected to grow 20 percent this year, said Xie.

He said the rapid increase in mobile phone sales was a result of a booming world economy which is allowing people to upgrade to a newer mobile phone more often.

Last year the number of mobile users in China reached 461 million, up 68 million from 2005.

"Chinese phone users on average buy new mobile phones every 21 months," he said.