Shanghai's economy on sound footing
By Chang Tianle (China Daily)
Updated: 2004-07-14 08:49

Gross domestic product in the nation's economic hub is expected to notch up a 14 per cent growth this year despite a host of measures taken to cool down the overheated economy.

Central government macroeconomic policies have had a positive impact on the city, said Shanghai Statistics Bureau Chief Economist Cai Xuchu, who made the growth estimate at a press conference yesterday.

Fixed-asset investment reached 139.6 billion yuan (US$16.86 billion) in the first six months of the year, registering a year-on-year increase of 25.9 per cent.

Manufacturing, real estate and infrastructure investment are the three main channels absorbing the most investment, increasing by 41.4, 20.4 and 10.3 per cent in the first half of the year.

Cai stressed that this pace shows no signs of slowing down, as fixed-asset investment rose 11.4 percentage points in the first six months.

High-growth sectors such as information, oil, petrol and steel absorbed 66.1 per cent of manufacturing investment, he pointed out.

In a bid to tackle the city's electricity shortage, 3.76 billion yuan (US$454 million) was pumped into electricity infrastructure, an increase of 62 per cent.

At the same time, social welfare received over 1 billion yuan (US$120 million) in the first half, 1.7 times the figure in the same period last year.

Another indication of the slowdown, according to Cai, is the decrease of bank loans.

The loan surplus among Shanghai's banks increased 108 billion yuan (US$13 billion) from January to June, 41.7 billion yuan (US$5 billion) less than the same period last year.

"New loans are decreasing sharply every month," he said.

Banks lent 50 billion yuan (US$6 billion) less in the second quarter than in the first quarter, a drop of 63.3 per cent.

"In addition, the slowdown of price rises, rein on land supply and the guarantee of rice and energy supplies are all signs of the positive effects brought about by the new policy," he added.

However, he conceded that fulfilling the mission of the State's macroeconomic measures to slow growth is a challenge.

He said the expansion in bank credit and investment is relatively too rapid.

"Energy shortages, especially electricity are still an issue that cannot be neglected. And rising raw material prices also put pressure on enterprises," he added.

He said Shanghai's economy would only remain healthy while maintaining relatively fast growth if the municipal government continues to adopt the central government's policy.

Shanghai exports are keeping up a strong momentum, reaching US$33.7 billion in the first half of this year, up 54.5 per cent.

High-tech products contributed 37.9 per cent to this, with a year-on-year increase of 8.2 percentage points.

The global economic recovery attracted more foreign direct investment (FDI) to Shanghai, which grew by 15 per cent in the first six months, reaching US$3.84 billion. But the number of FDI projects decreased by 7.6 per cent.

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