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October 17, 2009

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Home » Business » Economy

City posts jump in retail, investment

SHANGHAI achieved strong growth in local investment and retail sales last month and exports declined at a slower pace, adding new evidence that the city's economic recovery is on track.

Although the city's foreign direct investment continued to ease significantly year on year in September due to the lingering impact of the global financial crisis, it did post a smaller drop from August.

"Powered by both investment and consumption, the city's economic recovery is being sustained," said Luo Mingwei, a Chinalion Securities Co analyst. "External demand and investment sentiment also have improved."

Spending on roads, bridges and other fixed assets grew 25.6 percent from a year earlier to 56.4 billion yuan (US$8.3 billion) last month in the city, after edging up 0.7 percent in August, the Shanghai Statistics Bureau said yesterday.

For the first three quarters, the city's fixed-asset investment rose 14.1 percent year on year, compared with a rise of 12.3 percent for the January-August period, according to the statistics bureau.

The city's retail sales grew 14.3 percent year on year to 44.1 billion yuan in September. The pace was in line with an increase of 14.6 percent in August and a 14.3 percent hike in July, the bureau said.

Shanghai's economy grew 5.6 percent in the first half after rising 3.1 percent in the first quarter as the export sector was badly hit by the global economic downturn. City government has set a 9 percent growth target for the year.

Analysts said that the city's retail sales in the fourth quarter are likely to maintain strong momentum thanks to government stimulus policies that are encouraging people to buy products such as home appliances and cars.

The city's exports dropped 14.7 percent last month, the smallest monthly loss this year. It compared with a drop of 24.7 percent in August and a decline of 22.6 percent in July, the statistics bureau said.

Investment from overseas dropped 24.3 percent year on year to US$1.1 billion last month, compared with a decline of 31.7 percent in August and a dive of 34.4 percent in July.

"We may see volatility in exports and FDI figures in the coming months, but judging from the US and European markets, the worst period seems to have passed," said Wu Ke, a Zhongtian Investment Consulting Co analyst.

The city's export decline was led mainly by products in labor-intensive industries such as clothing, toys, shoes and furniture.

Shanghai is stepping up efforts to encourage exporters to develop products with high technological content and large profit margins.


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