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March 16, 2010

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Home » Business » Economy

Shanghai's economy stays on right track

SHANGHAI last month consolidated the grounds for a solid economic recovery, with consumer prices undergoing a mild growth acceleration, investments retaining stable expansion and retail sales and exports rising.

The consumer price index in Shanghai, the main gauge of inflation, increased 1.3 percent from a year earlier in February, up from the gain of 1.1 percent in January, the Shanghai Statistics Bureau said yesterday.

It compared with a nationwide CPI rise of 2.7 percent in February, sharply up from a 1.5 percent growth rate a month earlier. The CPI trend has triggered widespread concerns over an overheated national economy.

"Prices in Shanghai had a mild growth because food costs were stable," the bureau said in a statement.

Food prices in the city lifted 4.4 percent from a year earlier in February, less than the nationwide increase of 6.6 percent in the same period.

Fixed-asset investment in the city jumped 22.8 percent on an annual basis in the first two months to 62.7 billion yuan (US$9.2 billion), keeping a fast expansion momentum and still powered by urban infrastructure construction.

Shanghai retail sales rose 17.2 percent year on year to 95.7 billion yuan in the first two months, from last year's increase of 14 percent.

Exports in Shanghai jumped 34.5 percent from a year earlier to US$11.4 billion in February. The volume of exports had rebounded close to the 2008 level before the global financial crisis hit, the bureau said.

Imports surged 37.2 percent to US$11.2 billion.

"The city has captured a bullish growth momentum at the year's start, demonstrating the arrival of a post-crisis era," said Li Maoyu, an analyst at Changjiang Securities Co.

"The World Expo to be held in Shanghai this year will provide many new opportunities and the city aims to become an international financial and shipping center by 2020.

"We should thus accelerate reform in the city's economic structure.

"And it won't be a big problem for us to reach the projected 8 percent growth target for 2010."

Shanghai Mayor Han Zheng said earlier that a "conservative" target of 8 percent showed the government's determination to make the city less export-driven and to rely more on the advanced manufacturing and service sectors.

In 2009, Shanghai's gross domestic product grew 8.2 percent on an annual basis despite the world crisis.

The city has targeted a growth rate of 16 percent in retail sales this year, expecting robust demand to buoy the economy significantly.

"A more than 17 percent growth in retail sales in the January-February period is very encouraging," Li said.


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