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September 6, 2009

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City seeks economic structure gains

Shanghai is prioritizing structural improvements in the economy ahead of economic growth, a deputy mayor said yesterday.

The local authority has decided to focus on achieving economic structure adjustments and is prepared to sacrifice a little bit of growth if necessary to achieve sustainable gains in the economy, Tu Guangshao, deputy mayor of Shanghai, told a financial forum.

Shanghai's economy grew in the second quarter, pushing the first half growth to 5.6 percent after a sluggish gain of 3.1 percent in the first quarter.

However, Shanghai is still lagging behind other cities in terms of first half economic growth.

"Shanghai has a more urgent need and a more difficult task to adjust its economic growth than other places," Tu said.

Shanghai, which traditionally has been an industrial city, is now gearing up to be a city boasting modern services and an advanced manufacturing sector, he said.

The State Council in April issued a directive to build Shanghai into a global financial and shipping center by 2020.

The local government has framed implementation rules to facilitate the task.

It has allocated 10 billion yuan (US$1.46 billion) to help industrialize scientific and research programs as part of the structural upgrading.

Tu also called yesterday for support from financial institutions to smooth industry consolidation by granting more loans to companies undergoing merger and acquisition activities.

Financial institutions should help build Shanghai into an international trade center by planning and developing trade-related financial services such as yuan settlement programs, he said.

Tu said there has been encouraging improvement in the city's loan structure since the start of this year, as loans granted to the service sector, individuals and small- and medium-sized enterprises have increased.

He said the contribution of Shanghai's loans to China's total credit had decreased to more than 4 percent in the first half of 2009 from over 10 percent in the past.

The slide of loan contributions was partly a result of the city's more diversified financial system and a shrinking industrial sector, he added.


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