*

July industrial profits +4.1% y/y vs +3.6% y/y in June

*

Jan-July profits +3.6% y/y vs +3.5% y/y in H1

*

High-tech manufacturing profits +12.8% in Jan-July

(Adds quotes from analyst and official in paragraphs 4,6, data

breakdown in paragraph 5)

By Qiaoyi Li and Ryan Woo

BEIJING, Aug 27 (Reuters) - China's industrial profits

grew faster in July buoyed by high-tech manufacturing, even as

sluggish domestic demand weighed on the recovery in the world's

second-largest economy.

Profits in July jumped 4.1% from a year earlier following a

3.6% rise in June, National Bureau of Statistics (NBS) data

showed on Tuesday.

For the January-July period, profits expanded slightly

faster at 3.6% compared with 3.5% in the first half, offering

some hope of improving momentum amid dreary factory output,

export, prices and banking lending numbers earlier in August.

"The mild expansion in industrial profits showed that

domestic macro policies are taking effect" as the factory sector

is undergoing a transition and upgrade, said Zhou Maohua, a

macroeconomic researcher at China Everbright Bank.

The high-tech manufacturing sector, including the making of

lithium-ion batteries and semiconductors and related equipment,

led the earnings growth with a 12.8% rise in the January-July

period, the data showed.

Still, "domestic consumption demand remains weak while the

external environment is complex and volatile," said NBS

statistician Wei Ning, suggesting more efforts were needed to

boost domestic demand.

Tamer shipments last month raised a red flag over the

country's export-driven recovery and heightened concerns about

frail domestic demand.

China's July bank loans recorded the first contraction in 19

years, central bank data showed earlier.

Electric vehicle battery giant CATL recorded

faster profit growth in the second quarter, but its revenue fell

at a faster clip during the quarter, as EV sales slow in the

world's largest auto market.

Amid lacklustre demand, a prolonged housing downturn and

employment worries, Beijing is looking to pivot its stimulus

toward consumption.

At a cabinet plenary session earlier this month, Premier Li

Qiang vowed to boost the economy with a focus on consumption.

State-owned firms booked a 1% rise in profits in the first

seven months, foreign firms posted a 9.9% gain, while

private-sector companies saw profits up 7.3%, NBS data showed.

Industrial profit numbers cover firms with annual revenue of

at least 20 million yuan ($2.80 million) from their main

operations.

($1 = 7.1395 Chinese yuan)