China's service sector made a smaller contribution to the country's gross domestic product (GDP) in the first nine months, despite the rapid growth of the sector, a top economic planner said Friday.

The proportion stood at 38.7 percent, down 0.5 percentage points from the first half, said Xia Nong, deputy head of the Industrial Policy Department of the National Development and Reform Commission (NDRC), at a press conference in Beijing.

The growth of the service sector accelerated in the first nine months over the same period a year earlier by 1.5 percentage points, up 0.4 percentage points over the first half.

However, the sector, which recorded an increase of 11 percent, failed to outpace the growth of secondary industries and the national economy as a whole, Xia said.

Previous statistics showed the secondary sector, including manufacturing, mining and construction, grew at 13.5 percent, while aggregate GDP rose 11.5 percent in the first three quarters.

Xia said the development of emerging services, such as finance, real estate and business-related services, accelerated in the first three quarters. The growth of the finance sector was up 0.4 percentage points while the real estate sector rose 3.2 percentage points over the same period last year.

In contrast, the growth of more traditional service industries, including wholesale and retail, lodgings and catering, slowed. Only the transport sector showed gains in growth rate.

Real estate posted the fastest gains in the first nine months, with its growth rate being two percentage points higher than that for the whole service sector.

The fixed asset investment of the service sector reached 4.28 trillion yuan (573.7 billion U.S. dollars), representing an increase of 24 percent, 0.5 percentage points higher than the figure registered in the first half.

Investment in the sizzling property market surged 30.3 percent to 1.68 trillion yuan (225.2 billion U.S. dollars), Xia said.

Housing prices in 70 large- and medium-sized Chinese cities rose by 8.9 percent in September over the same period a year earlier, hitting a new high despite the government's efforts to curb surging property prices.

Xia said the commission would continue to support the service sector with more favorable policies and the deepening of reforms in the telecom, railway and civil aviation sectors.

The Chinese government has been campaigning to enhance the service sector to get rid of its heavy dependence on exports and investment for economic growth.

Wang Huimin, an NDRC official who was at the press conference, called for a boost in the development of the burgeoning logistics sector, an important part of the service sector.

"Domestic logistics enterprises need to innovate their services in the face of fierce competition from overseas companies and a shrinking profit margin due to oil price hikes and rising labor costs," she said.

The commission is currently drafting documents to create a better market system and to improve the taxation and supervision systems to support the development of the sector.

Wang said the commission would also promote strategic cooperation between the railway, ports, shipping companies and the large logistic companies to build a more integrated transport system.

The added value generated by the logistics sector in the first three quarters rose 17.6 percent to 1.13 trillion yuan (151.5 billion U.S. dollars). It accounted for about 17.6 percent of the total, 0.5 percentage higher compared with the figure for the same period a year earlier.

Zhu Hongren, another NDRC official in attendance, pointed out the rapid growth in high energy-consuming sectors and price hikes in capital goods as problems facing the Chinese economy.

He said some regions, coastal areas in particular, were burdened with the pressure of oil supply caused by price adjustments due to surging international crude prices.

On November 1, China raised the prices for gasoline, diesel oil and aviation kerosene by 500 yuan per ton, a rise of almost 10 percent. The aim was to increase oil products supply by shortening the gap between soaring international crude prices and state-set domestic oil prices.

"The country will definitely ensure the supply of oil products, " said Zhu, adding that supply and demand of oil products in China was balanced on the whole.

(Xinhua News Agency November 3, 2007)