The Consulate General of Switzerland in Shanghai - Commercial Section
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ISSUE N° 4 February, 2001


I. Economic Statistics and Facts in Year 2000

Year 2000 is the last year of Shanghai's NINTH PLAN FOR MUNICIPAL ECONOMIC & SOCIAL DEVELOPMENT. In 2000, Shanghai's gross domestic production (GDP) posted 455 billion yuan (USD 54.8 billion), 10.8% higher than 1999. This growth rate of 10.8% proves that Shanghai has seen double digit GDP growth in the last 9 years. From the following curve, one can find that since the opening up of the city's Pudong New Area, Shanghai was on the fast development track during the period of year 1993-1995. Afterwards, the overall development speed had slowed down, with the lowest happening in 1998. Though first task was to keep steady economic adjustment, last year the city's economy achieved a modestly stronger climb-up. GDP Per capita for the first time hit USD 4'180, joining the ranks of the middle-income countries/regions worldwide.

The statistics not only represent a year of upward development, but also proves that the city has successfully completed some tasks as part of the strategically economic restructuring. To be particular, the following two interesting aspects are worth of further watch-on:

1.1 More significant role played by the tertiary industry

Twenty years ago, the output value generated by the tertiary industry only accounted for 18% of the city's GDP. Ten years ago, the number grew to 32%. In 1999, this industry has shared almost the same portion of GDP as the secondary industry. Last year it finally overtopped the secondary industry to 50.2% of the GDP and contributed 57.3% to the city's GDP growth in 2000. Several sectors, which were once thought to be new, have gradually become the pillars through the last ten years' efforts by the city. The following table gives a glance of the rapid growth of these sectors on the basis of year-to-year comparison.

Performance of New Pillar Sectors

Especially the information industry has made great strides last year. The completion of the seven backbone projects of the program so called "Shanghai Information Port" absorbed investment of CNY 1.55 billion (USD 187 million), in which CNY 120 million coming from the city government. These key projects include computer center, internet service hub, underground cabling for telecom companies, ADSL link and interactive TV cables between the broadband highways and city's home and office computer users, etc. Another big news happened in the city's telecom industry last year is that the state-run local telecom business operator, Shanghai Telecom Company, has set up a joint venture with the AT& T. The JV, Shanghai Xing Tian Communication Co ,Ltd, is approved to run IP business in Pudong district and provide value-added telecom service. Experts comment that this JV establishment is a signal that Shanghai is opening the door of its telecom market to foreign companies.

1.2. Reform of the pattern of ownership of economic entities

Another factor attributing to the city's GDP growth last year is the continuing reform on state-owned enterprises (SOEs). Last year, about 600 SOEs went through restructuring the consistence of investors. 64 SOEs declared insolvency. These measures, in addition to the 38 preferential policies to encourage small and medium-sized enterprises, have consequently left more room for the development of non-state economy. Non-SOEs refer to the economic entities that are in collective, private or individual ownership.

While the percentage of the debt-ridden state-owned or holding enterprises has declined from 20.5% to 14.4%, the contribution of non-SOEs to the GDP has quickly increased from 24.8% to 26% by generating the added value of CNY 118 billion, up by 16.1% over 1999. Among non-SOEs, private enterprises have contributed 6.1% to the GDP with the added value of CNY 27.9 billion. By the end of year 2000, the number of private enterprises has reached 138'000 with the work force of nearly 360'000 people. The non-SOEs' share in the city's total fixed assets investment also grew from 46.9% to 52.1%, outstripping the state investment for the first time in the past 50 years.

Although the total amount of non-state investment and the number of private enterprises are impressive, the overall financing structure contains significant flaws. First, nearly 90% of the non-state investments have concentrated in the fields of real estate and industrial manufacturing. Secondly, investment from private enterprises is still too weak, due to their limited assets amount and competitiveness.

II. Outline of the blueprint for year 2001 and the next 5 years

Mayor Xu Kuangdi and directors of the city's Planning Commission and Finance Bureau addressed the Shanghai People's Congress on February 7th , 2001 and published this year's blueprint and the 10th Five-Year Plan mapped out by the government. According to Mayor Xu , the next five years will be the crucial period for the city to propel the progress of building Shanghai into a modern finance, trade and transportation center and founding the key role as an international city in Asia. He expects the city's economy to grow at an average of 9 to 11 percent within the next 5 years.

2.1. Projected Economic Indicators For 2001

The municipal planning commission projects that the city shall fulfil the following economic tasks this year:
- GDP growth by 9-10% ; 
- Industrial added-value grows by 9.5%
- Social retail sales grows by 8%
- Fixed assets investment of CNY 190 billion
- Export volume reaches USD 28 billion
- Unemployment of the urban population stays around 4.5%

2.2. Structure of Industrial System

The next five-year plan as a whole is featured by the municipal government's resolution to continue the reform. First of all, the city will rely on such new Pillar Industries as the information technology, finance, commerce & trade, automobile manufacturing, real estate. These sectors will be the most important engines to power the city's economic growth. Especially the hi-tech industry represented by the information technology is considered as the priority task. For example, by 2005, telecommunications, computer and software industries shall make up 13% the city's GDP and by this year 8.8% of the GDP. Meanwhile, the city will give further support to 4 new sectors: biomedicine, environment protection, new materials and transport logistics in the hope that they will turn into new pillars in the future. 
As for the structure of economic ownership, the city calls for a more flexible "oval" pattern. In this pattern, economic entities with pure state or pure private capital will constitute only the minor part. Instead, those in mixed ownership will make up the dominant percentage. According to the city's 10th Five-Year plan, the city aims that by year 2005, the non-state economy's contribution to the GDP will be improved from last year's 26% to 40%. By utilizing the capital market, state investment will gradually draw out from the traditional industries of food, drink, plastics, metal products etc. and shall switch to the high-tech and the pillar industries, such as fine steel, petrochemicals, automobile, electronics and information technology.

2.3. Industrial Layout

Apart from the internal system adjustment, the city government also for the first time starts to designate the layout of industrial enterprises according to their types. On January 6th, 2001, the 23-km2 Shanghai Chemical Industry Park piled in the Caojing area in the southern Shanghai near the Hangzhou Bay. With first phase investment of USD 18 billion, the park will accommodate both international and domestic leaders in the chemical industry. So far, big names like BP, BASF, BAYER and HUNTSMAN as well as China and Shanghai Petrochemical Groups have decided to invest billions of USD in production projects there. Already in the north near the Yangtze river estuary the Bao Steel base is located and in the east is the Pudong automobile base.

At the people's congress assembly, the government further has disclosed the plan for a new industrial layout, called three belts, as follows:

2.4. Infrastructure Construction

Besides extending the metro and light-railway lines, the city started to construct a magnetic-levitation railway early this year. The 33-km line will link a station of the Metro line No.2 with the Pudong International Airport. The construction is estimated to be complete in early 2003.

1. Statistics Bulletin Issued by Shanghai Statistics Bureau
2. Mayor´s Speech at the 4th Session of the Shanghai Municipal People's Congress (07/02/01)


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