SHANGHAI'S gross domestic product grew 7.8 percent from a year earlier to 493.7 billion yuan (US$78.9 billion) in the first quarter, the Shanghai Statistics Bureau said yesterday.

The rate picked up from last year's 7.5 percent rise and was higher than the national average of 7.7 percent, although Shanghai was again China's slowest-growing city among the 22 provinces and municipalities which have released figures for the first three months.

"The data indicate that Shanghai is steady on the path of economic recovery," said Li Maoyu, an analyst at Changjiang Securities Co. "Despite the relatively slow pace, Shanghai is sticking to its own growth course toward a service-driven economy."

The service sector expanded 9.5 percent to 296.6 billion yuan, with manufacturing rising 5.4 percent and agriculture contracting 2.1 percent.

With only 0.06 percent of China's land, 1.8 percent of its population and 1.7 percent of its investment, Shanghai produced over 4 percent of the nation's economic output.

Shanghai is targeting an economic growth rate of 7.5 percent this year, hoping to accelerate industrial restructuring, raising incomes and enhancing efforts to combat pollution, Shanghai Mayor Yang Xiong said earlier in his government work plan.

Yan Jun, chief economist at the city's statistics bureau, said Shanghai was confident of achieving its target, as the city kept a good balance between growth and inflation.

Shanghai's Consumer Price Index, the main gauge of inflation, rose 2.3 percent from a year earlier in the first quarter, compared to the national average of 2.4 percent.

Foreign direct investment in Shanghai rose 10.4 percent to US$1.45 billion in March, a three-month high compared to China's 5.6 percent increase in foreign investment.

But the city's trade remained weak, as exports slumped 4.6 percent in March while imports lost 7.6 percent.

So far, 22 provinces and municipalities have released their first-quarter GDP data, all of which were better than the national average.

Beijing reported a rate of 7.9 percent, making it the second slowest after Shanghai.

China's economic growth was "reasonable" in the first three months, and the country will continue a prudent monetary policy stance to control inflation, China's central bank's Governor Zhou Xiaochuan said last week.

President Xi Jinping said on Thursday that China will maintain a tight control over the macroeconomic policy, but at local level there will be more room to maneuver over microeconomic policies.

Zhu Haibin, chief China economist at J.P. Morgan, said that improving investment efficiency should be a priority for China, and Shanghai was an example of bettering investment quality.