China's service sector, especially internet-based businesses, will continue to outperform other sectors in 2018, supporting China's growth, according to analysts.

Tang Jianwei, an analyst with the Bank of Communications, predicted that the growth pace of the service sector will exceed the industrial sector, with the digital economy thriving.

"China's supply-side structural reform will lead to upgrades within industries, bringing improvement in efficiency and quality of companies," Tang said.

The latest data from the National Bureau of Statistics showed that China's service sector expanded 8 percent year on year in 2017, outperforming the overall economy, which grew at 6.9 percent.

A closer look at the data shows that the contribution from traditional services sectors such as real estate, retail and wholesale, finance and catering all declined or remained flat last year, according to Nomura, a Japanese securities company.

The upside was mainly driven by information technology and transportation services, which is a sign of strong performance in the internet-led new economy, it said.

"We believe internet businesses are likely to continue to perform, as China is rebalancing towards the so-called new economy," Nomura noted.

Following the release of better-than-expected GDP data Thursday, Nomura has raised its 2018 GDP growth forecast for China by 0.1 percentage point to 6.5 percent.