Shanghai Daily news

The city's economy posted the fastest growth in three years during the first half as a bullish stock market fueled consumer spending and exports remained strong, the Shanghai Statistics Bureau reported yesterday.

Analysts said the momentum will probably continue in the next six months if stocks keep up their torrid pace.

The city's gross domestic product jumped 13 percent year on year to 556.19 billion yuan (US$73.55 billion) in the six months through June.

The surge followed a 12.6 rise in the first quarter, and a 12 percent jump for all of last year. Separate figures for the second quarter were not reported.

The city's growth rate compared with a national first-half GDP spike of 11.5 percent.

Shanghai's service industry was the star performer. It gained 14.1 percent to 285.84 billion yuan in the first six months, charting faster growth than the manufacturing sector for the first time since 2001. Manufacturing climbed 12.1 percent to 267.33 billion yuan through June.

"The larger rise in services was driven by the finance sector, which contributed 18 percent to total GDP growth during the period," said Cai Xuchu, spokesman and chief economist at the Shanghai Statistics Bureau.

The finance sector jumped 29.5 percent in the first six months, led by the booming stock market. The growth was 16.3 percentage points higher than in the same period last year.

Shares transactions in Shanghai jumped more than fivefold from a year earlier to 15.66 trillion yuan through June, the bureau said. The benchmark Shanghai Composite Index has gained 57 percent this year after more than doubling in 2006.

"If the stock market stays hot, along with a steady housing market, the city's economy will likely remain in the fast lane in the six months to come," Cai said.

The city released detailed figures for its major economic barometers earlier this month, all experiencing major upswings. Among them, retail sales rose 14.2 percent to 188.75 billion yuan in the first half after gaining 13.2 percent through March. The growth was the strongest in a decade, driven by higher incomes and gains from the stock market.

Spending on fixed assets, including factories, roads and power plants, grew 9.6 percent from a year earlier to 192.84 billion yuan through June, up from a 17.6-percent increase in the first quarter.

Exports climbed 20.9 percent to US$64.3 billion in the first half while imports rose 21.3 percent to US$63.6 billion.

The city's inflation gained 1.8 percent in the period, led by a 5.5-percent increase in food costs, the bureau said. The growth outpaced the 1.5-percent rise in the first quarter.