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Shanghai aims for ‘milestone projects’

By Wang Yanlin | August 18, 2016, Thursday | Online Edition

BEING the forerunner of China's economic reform, Shanghai has always taken the lead in trying out various experimental projects to test their viability.

The good thing is that the city still manages to enjoy a steady growth with smooth acceleration of various trial programs.

The China (Shanghai) Pilot Free Trade Zone, since its inauguration in 2013, has contributed to many laudable practices such as the negative list and the registration-based supervision of China's reform, which copies them to other areas for economic transformation.

The city has also strived to become a global innovation center in science and technology ?among the first in the country to call on mass innovation.

"Innovation is one of the keys to Shanghai's economic development,"said Shi Liangping, director of the Institute of Economics of the Shanghai Academy of Social Sciences. 

"The city must take its own approach to foster it." Shi said.

Shanghai may unlikely be the first choice for grassroots innovators due to high operating costs. But when such firms grow big enough, Shanghai is the top choice because it has a great business environment.

"Shanghai is the largest hub in China for multinational companies to establish research and development centers, which gives a boost to the city's innovation capability," Shi said.

With 0.06 percent of China's land, 1.8 percent of its population and 1.7 percent of its investment, Shanghai produces more than 4 percent of the nation's overall economic output, the statistics bureau figures revealed.

Shanghai recorded a "better-than-expected" 6.7 percent economic growth year-on-year in the first half this year, driven by the fast developing services sector, data presented by the Shanghai Statistics Bureau showed.

The pace was on par with national growth during the same period and Shanghai's expansion in the first quarter.

The economic indicators showed that the city's growth was better than expected with structural improvement, said Chief Economist Tang Huihao of the statistics bureau.

The added value in the city's services sector rose 11.6 percent to 917.57 billion yuan (US$137 billion), accounting for 70.8 percent of the city's gross domestic product in the first six months.

Its growth also offset a 15.3 percent decline of added value in the agricultural sector and a 3.3 percent fall in manufacturing.

Despite an output drop in the first half, Shanghai is determined to keep the manufacturing sector steady. In the local 13th Five-Year Plan, Shanghai envisions that its manufacturing industries should contribute no less than 25 percent of the city's economic output. In 2015, the manufacturing sector made up 31 percent of Shanghai's total gross domestic product.

Production in strategic new industries, such as new energy and the biological sector, rose 0.7 percent to 385.38 billion yuan in the first six moths, while retail sales rose 7.7 percent to 4.86 trillion yuan, faster than the 5.9 percent growth in the first half of last year.

Online sales totaled 60 billion yuan, up 17.8 percent from a year ago.

"From the data, we see faster growth in the services sector, advanced manufacturing sector and the Internet sector, revealing improved economic structure in Shanghai," Tang said.

"The ongoing reforms in the free trade zone, Shanghai's commitment to technological innovation, and supply-side reforms will trigger greater economic momentum in the city."

Shanghai has been prioritizing boosting innovation this year, while trying to keep unemployment below 4.5 percent.

It plans to invest 3 percent of its GDP in green projects.

Shanghai also aims to "further improve its business environment" and attract another 45 multinational companies to locate their regional headquarters in the city this year. By the end of last year, Shanghai was home to 535 regional headquarters of multinational companies, with 41 of them being the Asia-Pacific headquarters.

About 230 multinational companies located their regional headquarters in Shanghai in the past five years, or an average of 45 per year.

These companies accounted for only 1 percent of the city's total foreign-invested firms, but they contributed 9 percent of foreign-invested firms' revenues and 15 percent of their profits.

Shanghai is also home to 396 research and development centers, or 25 percent of the country's total. Over 120 were set up by Fortune Global 500 companies, or one third of the country's total.

Shanghai Mayor Yang Xiong has said that he was "very confident" about the city's economic growth and the social development prospects over the next five years.

"I am optimistic because Shanghai has sound economic fundamentals and great potential thanks to its reform efforts," Yang said. "Although growth has slowed in recent years, the city has made significant progress in upgrading its industries, raising fiscal income and creating jobs," he said.

Shanghai was one of the first cities in China to enter the "new normal" growth stage, which is defined by slower expansion, but greater quality and efficiency, Yang said.

It was also the pioneer in reforms and opening up, which are key to achieving its goal to become a global center of economy, finance, trade and shipping.

"Openness is the biggest advantage Shanghai has," Yang said. "We will continue to be open, especially with our various trials in the China (Shanghai) Pilot Free Trade Zone."

The city government has set a growth target of between 6.5 and 7 percent for this year, and not less than 6.5 percent a year through 2020, Yang said. People should expect more "milestone projects" as the city becomes an innovation center for science and technology, he said.

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