China's service trade is expected to grow by more than 20 percent annually by 2010, according to senior official with the Ministry of Commerce.

Trade in services would be a priority for China's economic development, said Hu Jingyan, head of the ministry's department of service trade.

The service sector had grown by 16 percent annually since early 1980s, yet the ratio of services to total trade volume was just half the international average, which was 18.9 percent in 2005, he said.

Traditional services like transport and tourism made up 60.5 percent of the service sector in 2005, while modern services like finance, insurance, telecommunications and consulting were yet to be developed, he said.

The sector accounted for just 40 percent of the gross domestic product in 2005, which indicated "great potential", said Hu.

On average, the service sector accounted for 72 percent of GDP in developed countries and 52 percent in developing countries, he said.

Late March, the State Council, China's cabinet, forecast the trade volume in services would reach 400 billion U.S. dollars by 2010.

The government is aiming for the service sector to contribute 43 percent of China's GDP by 2010 and 50 percent by 2020.

The forecast underlined the need for further investment, including private investment, and preferential policies in the service sector.

Banks will be encouraged to lend to service companies that conform to state industrial policies, and aid eligible businesses so that they can raise money on the domestic and overseas capital markets.

Source: Xinhua