SHANGHAI (Reuters) - China's commercial capital of Shanghai has reached the point where it needs to boost reform and innovation or risk stunting economic development, its top official warned on Monday (May 8).

In an address at the start of Shanghai's municipal party congress, Han Zheng, head of Shanghai's branch of the ruling Communist Party, said the city must build industries and a modern service sector, build up a centre of scientific innovation, increase research spending and raise education levels.

Han's remarks highlight the challenges Chinese leaders, even in one of its most dynamic cities, face in adapting to China's slowest growth in a quarter century. "Shanghai is already at the stage where it can't advance without reform and innovation," he said, calling for increased opening of the financial sector.

Shanghai's economy, along with those of other cities and provinces along China's wealthy east coast, is one of the country's most vibrant with gross domestic product growing 6.8 per cent last year.

Han said the economy grew at an average of 7.2 per cent over the past five years. He gave no target for the coming half decade.

Like the rest of the country, Shanghai, a city of more than 24 million people, has been trying to shift away from investment-led growth to a more sustainable model in the face of a slowing economy.

Han told delegates to the local party congress, which convenes once every five years, the city needed scientific and technological innovation to drive economic and social development.

The Shanghai party congress, in addition to outlining the city's development path, will pick new leaders and elect delegates to represent it at the party's national conclave, the 19th Party Congress, in Beijing in the fall.