Shanghai's gross domestic product expanded 7.7 percent from a year earlier to 1.02 trillion yuan (US$164.5 billion) in the first half of this year, the Shanghai Statistics Bureau said yesterday.

The rate slowed a bit from an increase of 7.8 percent in the first three months but was higher than the national average of 7.6 percent between January and June.

"Shanghai's economy maintained a stable growth momentum," said Yan Jun, chief economist at the bureau. "The city is sticking to the principle of pursuing advancement amid stability and now we are putting more emphasis on advancement."

The bureau did not provide a second-quarter growth figure. But it can be deduced that the city has posted faster growth than the national average for two consecutive quarters.

"Shanghai has a strong service sector, and the city's ongoing industrial transformation has further enhanced that strength," Yan said.

Production in the service industry gained 9.6 percent to 627.6 billion yuan. The rate outpaced that of the manufacturing sector by 4.7 percentage points, the bureau said.

It made the output of services account for 61.7 percent of total production, up 1.3 percentage points from a year before.

In the first half, Shanghai's industrial production rose 4.8 percent to 329.4 billion yuan, with automobile and bio-medicine reporting double-digit production growth rates.

Retail sales jumped 9.1 percent to 388.7 billion yuan in the January-June period with fixed-asset investment adding 12.1 percent to 231.5 billion yuan.

The city's trade weakened with exports decreasing 4.3 percent and imports losing 3.2 percent during the period, but inflation was still under control, as the Consumer Price Index was 2.3 percent in the first half, down 1.3 percentage points from a year earlier.

"Shanghai's trade performance has deteriorated since the end of last year," said Xue Jun, an analyst at CITIC Securities Co. "But with the strengthening position of Shanghai as a trading center, we expect trade may stabilize in the near future."

Last month, the State Council gave the nod for Shanghai to trial China's first international free trade zone, the latest step in a national strategy to open markets wider and build Shanghai into an international trade and finance hub.

In a free trade zone, goods can be imported, manufactured and re-exported without the intervention of customs authorities.

Yan said the program will create a comprehensive platform for traders rather than merely offering preferential policies.

Shanghai will put construction of the free trade zone top of the government work agenda for the rest of this year, Shanghai Party Secretary Han Zheng said earlier this month.

With only 0.06 percent of China's land, 1.8 percent of its population and 1.7 percent of its investment, Shanghai produced more than 4 percent of the nation's overall economic output in the first six months.

Shanghai is targeting an economic growth rate of 7.5 percent this year, hoping to accelerate industrial restructuring and raise incomes, Mayor Yang Xiong said earlier, stressing a further shift to "growth quality."