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Economic growth in Shanghai still slowing down

SHANGHAI'S economic growth further tailed off to 3.1 percent in the first quarter after posting a single-digit growth last year due to the deepening impact of the financial crisis on the city's foreign trade and industry sector.

Its gross domestic product reached 315.05 billion yuan (US$46.33 billion) in the first three months, the Shanghai Statistics Bureau said at the weekend.

The growth rate was 11.53 percent in the same period last year. It was also lower than China's 6.1 percent economic expansion in the first three months.

"The city suffered more due to its larger exposure to the global economic meltdown, which caused slumps in exports. And the city's industrial enterprises highly rely on exports which led to decreases in industrial output," said Lu Ming, professor at School of Economics of Fudan University and consultant to the World Bank.

The industrial sector suffered from fewer orders due to the slower economic growth. The industrial output dropped 8.1 percent from a year earlier to 124.34 billion yuan in the first three months. Industrial expansion slowed to 8.2 percent in 2008 from 11.5 percent the year before.

The industrial sector's contribution to the city's economic growth continued to shrink to 39.5 percent in the first quarter from 45.5 percent last year, against the service sector's 60.1 percent. The service industry began to lead local economic expansion from 2006 but the two sectors usually kept a balanced proportion of almost 50-50.

Shanghai's service industry, including financial firms, catering and property companies, grew 13.1 percent in the first quarter to 189.38 billion yuan.

The growth rate widened from 10.01 percent in the same period last year, thanks to the financial sector, which expanded 26 percent in the first three months from a year ago to 39.79 billion yuan.

"The industrial sector was hit harder than the service industry due to its larger exposure to global economic recessions than financial firms. But the expansion in this sector is expected to pick up and catch up with the service industry as we have seen signs of recovery," said Lu.

The city's trade volume fell 26.3 percent in the first quarter on a yearly base to US$55.21 billion. Imports plunged 32.1 percent.

"Labor-intensive industries including textile, furniture and toys were among the worst hit while industries which have invested a lot in research and development such as equipment building better weathered the storm," said Lu.

Shanghai's retail sales increased 14.1 percent to 124.48 billion yuan in the three months. Catering posted the fastest growth, jumping 17 percent to 18.84 billion yuan.

The city's fixed assets investment added 1.7 percent to 90.23 billion yuan.

The city's Consumer Price Index, the main gauge of inflation, rose 0.4 percent in the first quarter, compared with 6.8 percent a year ago. The Producer Price Index, chief gauge of factory-gate inflation, decreased 6.6 percent from a year ago.


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