China's communication equipment market hit 271.1 billion yuan ($38.1 billion) in sales volume last year while the annual growth rate declined to 3.9 percent from 16.1 percent in 2006.

The slowdown was chiefly caused by price cuts in mobile equipment terminals. This accounted for about 64.1 percent of the total in terms of value, said a CCID Consulting report released here on Wednesday.

Sales of mobile phones, the major mobile equipment terminals, reached 150 million units in 2007, up 23.1 percent year on year. The average price of the units dropped from 1,408 yuan in 2006 to 1,142 yuan, according to the CCID.

Jiang Lifeng, a CCID senior researcher, said as mobile phones selling for less than 500 yuan had taken more than 35 percent of the Chinese market, there was little room for further price cuts, Jiang said.

He predicted China's communication equipment market would grow 10 percent to exceed 300 billion yuan in 2008.