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Services shine, but still trail industrial sector

By Wang Xu (China Daily)
Updated: 2008-01-29 09:51

China's service industry notched up the fastest growth in more than a decade last year, but it still lagged behind the nation's sizzling industrial sector, a senior government official said.

The total output of the service sector expanded to 9.6 trillion yuan in 2007, up 11.4 percent year-on-year, according to the National Development and Reform Commission (NDRC), the top economic planner.

The Financial industry led the spurt, ballooning 16.7 percent year-on-year as the nation's major lenders and insurers rushed to the domestic and overseas stock markets to bolster their expansion last year. In contrast, the hospitality sector ran out of steam, growing two percent slower than in 2006.

"This is the fastest growth of the service sector since 1996," said Xia Nong, deputy chief of the industrial policy department of the NDRC.

Yet, the share of the service sector in GDP continued to decline, said Xia. It accounted for 39.1 percent of China's GDP in 2007, 0.3 of a percentage point lower than in 2006.

A manufacturing powerhouse, China is trying to move up the value chain by boosting its modern service sector in areas such as the financial, logistic and telecom industries.

The nation set a target in 2005 to increase the share of its service sector in GDP by three percentage points in 2006-10. But the share hasn't gone up for two straight years.

"This is mainly because of the even stronger performance of the industrial sector," Xia said.

The industrial sector expanded 13.4 percent last year, thanks to the hefty investment in infrastructure and robust demand from overseas markets.

"The nation will deepen the reforms and create a favorable environment to boost the service sector in the coming years," Xia said.

As part of the efforts, broader market access will be offered to sectors such as telecom, railway, civil aviation and postal services, said Xia.

The government will also offer tax, credit and land incentives to related enterprises. Foreign investors are also being encouraged to set up operations in this sector.


(For more biz stories, please visit Industry Updates)



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