The National Development and Reform Commission (NDRC), China's top economic planner, told Xinhua on Thursday that officials wanted to encourage development of the service industry.

Service industry output was 9.6 trillion yuan ($1.37 trillion) in 2007, up 11.4 percent year-on-year.

However, the service industry's contribution to gross domestic product (GDP) in 2007 decreased 0.3 percent from 2006, said Xia Nong, the deputy director-general of the NDRC's department of industrial policies.

According to a March 2007 proposal from the State Council, or cabinet, China would increase the contribution of the service sector to GDP by 3 percent from 2005 to 2010. Services should become the dominant activity in some larger cities and outperform the national GDP growth rate.

Experts warned that this would be a difficult task.

"The main problems of the service industry include its small scale, low quality, inefficient structure, slow reforms and weak innovation," said Xia.

GDP grew 11.4 percent last year, partly driven by secondary industry, whose output rose 13.4 percent. Fixed asset investment of the secondary sector grew 24.8 percent.

Xia added that China would act to enhance the tertiary industry's development by opening it up, providing policy and investment support and improving its managerial expertise.

The State Council publicized a notice in mid-March to promote the usage of foreign capital in the tertiary industry on the basis of optimizing the sector's structure and improving its service quality.

(Xinhua News Agency March 28, 2008)