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November 2, 2009

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Mayor highlights service industry, innovation as keys to city's future

SHANGHAI should push forward the development of its service industry and advance innovation, Mayor Han Zheng said yesterday.

He said the fundamental way to sustain the economy was to get closer to people and raise their living standards to create consumption demand.

"Shanghai must build a service-led economy," Han said at the 21st International Business Leaders' Advisory Council.

The annual meeting, initiated by former Shanghai Mayor Zhu Rongji in 1989, is this year themed "Lessons Learned from the Global Financial Crisis in Helping the Acceleration of the Economic Transformation of Shanghai."

Han said Shanghai's economy had reversed a slowdown. In the third quarter, for example, the city's gross domestic product expanded 9.8 percent from a year earlier, significantly improved from the growth of 3.1 percent in the first quarter and 7.9 percent in the second.

"It is time for us to make economic transformation our key task as the economic climate stabilizes," Han said.

"Shanghai should change from a manufacturing-based growth model to a service-driven economy and reduce reliance on exports."

Shanghai's service industry grew 14.1 percent from a year earlier in the first three quarters, outperforming the manufacturing sector which withdrew 0.6 percent during the period in the face of the global economic turmoil.

However, the service industry still had a relatively small proportion of 40 percent weight in the city's total economy, far lower than other developed markets, the mayor said.

Shanghai aims to become a global financial and shipping center by 2020.

Tadashi Okamura, adviser to the board at Toshiba, said Shanghai was standing at an economic turning point and people should be positive.

"The crisis has given us a chance to look for new opportunities," Okamura said. "We must make efforts to develop new technologies, particularly innovations that lead to the creation of new demands and advances in such areas as environmental technology and energy efficiency."

Okamura said businesses should develop products like light bulbs that consume less power, have a longer life span and greatly reduce the generation of carbon dioxide.

While Shanghai was moving toward a service-led economy, it should not undermine its manufacturing, members said at the meeting at the Pudong Shangri-La Hotel.

The industrial sector should change to make more value-added products, and innovation would play a pivotal role, they said.

The Shanghai government has allocated 10 billion yuan (US$1.46 billion) to fund technological development and innovation in the city.

Advanced manufacturing, such as biomedicine, green vehicles, marine engineering and new materials, has been earmarked as high-tech industries for development.


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