Gao Shangquan, director of the China Economic Restructuring Institute, said while the world economy is gaining momentum in service sector, China still lags far behind developed countries in this area.

Service sector, regarded as key to solving the unemployment problem in China, accounts for only 33.3 percent of the country's gross domestic product, while the average figure in developed countries hits 70 percent.

"The main reason for the slowness lies in the government's over-control of this sector," Gao told a national workshop on the service sector held Tuesday in Hangzhou, capital of east China's Zhejiang Province.

Gao said the government's excessive control results in administrative monopolies and stringent restrictions which prevents the industries from operating in line with market mechanism.

Gao said more enterprises should be allowed to enter the sector and competition should be encouraged to upgrade quality and lower prices for services and products.

Official statistics show 70 percent of the fixed assets in the service sector are state-owned.

To give the sector more freedom, market order should be established, administrative intervention should be avoided and relevant regulations should be adjusted, Gao said.

(Xinhua News Agency October 23, 2002)