The purchasing managers' index (PMI) for China's non-manufacturing sector came in at 54.8 in March, up from 54.3 in February, the National Bureau of Statistics (NBS) said Sunday.
A reading above 50 indicates expansion, while a reading below reflects contraction.
The service sector recorded stable performance, with the sub-index measuring business activity in the industry standing at 53.6, up from 53.5 in February.
Indices for sectors including railway, telecom, banking and insurance all stood above 57, indicating robust business growth.
The sub-index for new orders in the service sector came in at 51.5, up from 50.5 in February, according to the NBS.
The construction sector recorded faster expansion, with the sub-index measuring business activity in the industry rising 2.5 percentage points to 61.7 in March.
The sub-index for new orders in the construction sector surged to 15-month high at 57.9, up from 52 in February.
China is trying to shift its economy toward a growth model that draws strength from consumption, services and innovation. The service sector accounted for 52.2 percent of the country's economy last year.
Sunday's data also showed the manufacturing sector PMI edged up to 50.5 from February's 49.2.
