Service sector drives up growth

According to the National Bureau of Statistics, the service industry — the biggest employer in China — grew 8.3 percent from a year earlier in the first half, which was faster than the GDP growth rate. However, the manufacturing sector's growth was 7.6 percent.

Overall GDP growth slowed to 7.5 percent in the second quarter from 7.7 percent in the first, due to a slowdown in exports, factory production and investment.

Fixed-asset investment in the service sector increased 23.5 percent year-on-year for the first six months, faster than the 15.6 percent growth in the manufacturing sector, the NBS showed.

In the first six months, the service sector accounted for 45.3 percent of the GDP, while the manufacturing industry contributed 47.2 percent.

The government has set a target to lift the share of services in nominal GDP to 47 percent in the 12th Five-Year Plan (2011-15) from 43 percent in 2010.

Millions of businesses will see new opportunities during the period.

For instance, SAL Tours, a Shanghai travel agency, is benefiting from the fast expansion of the tourism market. All of the company's tours during the summer holiday were fully booked before the end of July, with an increase of more than 10 percent on cruises.

Ding Zhenyi, a sales manager at the travel agency, said that the demand for relaxing tours such as cruises, in-depth trips to specific destinations and booking services for individual tourists increased as Chinese people who get richer want to take it easy.

On July 30, top policymakers vowed to promote the development of emerging services and consumer services and accelerate the industrial structural transformation.

The central government announced a cut in production capacity in 19 industries in July, including steel, cement, copper and glass.

That suggests policymakers are prepared to restructure the economy and tolerate the necessary pain, analysts said.

"We believe service sector development is the supply side of the Chinese rebalancing equation," said Chang with Barclays Capital.

The development of the service sector is expected to strengthen domestic demand, particularly private consumption, and it can create more employment opportunities, particularly at the skilled and higher-income level, she said.