"The increasing weight of the service industry has reflected the fruits of government efforts to adjust the city's economic structure," said Li Maoyu, an analyst at Changjiang Securities Co.

"But it also reflected a retreat in the manufacturing sector, which suffered from weak external demand."

Shanghai's exports slumped 22.3 percent from a year earlier to US$62.5 billion in the first half due to the fallout from the global financial crisis mirrored in the drop in industrial production. Foreign direct investment in the manufacturing sector also dived 31.8 percent to US$1.2 billion during the period.

The city's retail sales retained a healthy growth of 13.8 percent to 250.6 billion yuan in the first half, while fixed-asset investment gained 9.6 percent to 216 billion yuan.

The Consumer Price Index, the main gauge of inflation, dipped 0.5 percent in the January-June period, while the Producer Price Index, the factory-gate inflation yardstick, withdrew 7.2 percent, showing the threat of deflation still existed but was mild, Cai said.

"Shanghai will continue to carry out stimulus policies to boost local demand, while many Expo-related projects will gain traction in the second half," Cai said.

He said the city would seek "quality growth" to benefit people in the long term.

The bureau said the average disposable income for Shanghai's urban dwellers in the first six months of this year grew 7.6 percent to 14,965 yuan in the first half.

(Shanghai Daily July 23, 2009)