Shanghai’s economy looking up at last
The Shanghai government has vowed to maintain its progress in economic restructuring while using innovation as its main engine for further development, after the city posted positive economic results in the first half of this year.
“We must not lose sight of the problems we are facing and will continue our best efforts for the tasks at hand,” Shanghai Party Chief Han Zheng was quoted saying by the Shanghai Morning Post.
“In order to measure the results of our work, numbers are not enough. We should also pay attention to the quality and actual effects, as well as the satisfaction levels of Shanghai’s people,” added Han.
According to the Shanghai Municipal Statistics Bureau, Shanghai finally raised its gross domestic product (GDP) growth to the national level of 7 percent in the first half of this year. This result comes after economic growth had ran below the national average for seven consecutive years.
Shanghai’s GDP expanded to 1.19 trillion yuan ($191 billion) and the added value of the tertiary industry grew 10.2 percent year-on-year, accounting for 67.1 percent of the total GDP. The consumer price index moved up 2.4 percent, down 0.2 percentage point from a year ago.
“Shanghai has had to overcome a series of negative factors this year, such as the decline in commercial imports and exports and a significant fall in industrial growth,” said Tang Huihao, the bureau’s chief economist.
“The major indicators are steadily and gradually picking up, with consumer price growing mildly,” he added.
Statistics revealed that the city’s State-owned enterprises made considerable contributions to Shanghai’s economic growth this year. According to the State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government, such enterprises recorded 944 billion yuan in revenue from January to June, and their profit grew 12.4 percent year-on-year to 58.8 billion yuan, thanks to economic restructuring and reform. State-owned companies also completed 15 asset-restructuring projects in the first half of 2015 and launched 24 key projects with a total value of 164.7 billion yuan.
The city was a nation-wide leader in GDP growth from 1992 to 2007, but it fell below the national average for seven years after the financial crisis broke out in 2008 and when it began the process of economic restructuring. When China’s GDP growth slowed to 7.4 percent in 2014, Shanghai’s economic pace was still 0.4 percentage points lower at 7 percent.
“The process of restructuring is to put behind the old and establish the new. It is good to see Shanghai has now gotten back on track in a comparatively short period of time,” said Sun Lijian, a professor with Fudan University, who suggested that the city should now diversify its industrial structure.
“The property and finance sectors used to be big contributors to the city’s economic growth, but they are easily influenced by the economic circle. In order to achieve stable economic growth, Shanghai should have medical care, highend manufacturing and life services play a bigger role because market demand in these sectors are more stable,” said Sun.
Shanghai’s economic and social development objectives for 2015 are to stabilize economic growth while restructuring it, improve the quality and efficiency of growth, as well as to keep public revenue in pace with economic growth, the municipal government’s annual work report released earlier in January stated.
For the first time this year, Shanghai did not make GDP growth an objective, becoming the first local government to do so.
According to Liu Shengjun, deputy director of the ChinaEurope International Business School in the Lujiazui International Finance Research Center, the city’s positive economic results may have signaled the end of the tough times.
“Shanghai has passed its most difficult time in the transition from traditional manufacturing to advanced manufacturing and modern service sectors,” Liu said.