Shanghai’s Economy and Commerce in 2010 and the Future Outlook
Sha Hailin
Deputy Secretary-General, Shanghai Municipal People’s Government
Chairman, Shanghai Municipal Commission of Commerce
（Feb. 15, 2011）
Honorable Consul Generals,
Honorable Vice Mayor Tang，
Distinguished guests, colleagues, ladies and gentlemen：
Good afternoon! It gives me great pleasure to meet you here right after the Chinese New Year, to discuss Shanghai's commerce, to deepen our mutual understanding, and to promote common development. First of all, on behalf of Shanghai Municipal Commission of Commerce, I'd like to extend the warmest welcome to all of you. According to Chinese traditions, I'd also like to take this opportunity to wish you the very best Year of the Rabbit!
I'll talk about three aspects today: the first is a brief summary of Shanghai's socio-economic development and commerce in 2010; the second is Shanghai's development priorities during the 12th Five-Year Plan period, and our initiatives to develop Shanghai into an international trade center. The third will be the major tasks for Shanghai's commerce in 2011.
I. Shanghai's socio-economic development and commerce in 2010
The year 2010 is the Expo Year, and also marks the last year for the 11th Five-Year Program. We placed equal emphasis on the two tasks in the year 2010: hosting the World Expo and city’s development transformation. New achievements were attained in the socio-economic development.
First of all，the success of the World Expo fulfilled the long-held aspiration of the Chinese people while bestowing on Shanghai invaluable experience and rich resources for future development. Experiences gained from hosting the Expo and the drive to make it successful also significantly boosted our economic growth, structural transformation and upgrading. The city's 2010 GDP grew by 9.9% from that of last year to around RMB 1.69 trillion. The value-added of the service industry grew by about 57%; domestic consumption stimulated the economy greatly, the total retail sales of consumer goods exceeded RMB600 billion. Indigenous innovation gained further momentum. R&D expenditure accounted for more than 2.8% of the city's GDP. The number of patents awarded and filed grew by 39% and 7.7%, respectively, from that of last year. The Three-Year Action Plan for smart grid, Internet of Things, and cloud computing was launched. The city's ecological environment was further improved. Environmental protection expenditure stood at about 3% of the city's GDP. Living standard improved further. The per capita disposable income of urban and rural households is up 10.4% and 11.5% from last year. We are more open to the outside world. Shanghai maintained its top port position by taking up a 23% share of China's foreign trade. Shanghai attracted the largest number of MNC headquarters. It was ranked on top in the country in overseas investment and engineering contracts. More and more famous international trade and commercial organizations, wholesalers and retailers have set up operation here. Pilot comprehensive reform in Pudong provided strong impetus. We will implement Opinions on Developing Shanghai’s Modern Services and Advanced Manufacturing and Turning Shanghai into an International Financial and Shipping Center. At present, there are more than 1,000 financial institutions in Shanghai. The Shanghai Financial Innovation Award was given out for the first time. The Port of Shanghai maintained its top ranking in cargo throughput in the world. Its ISO freight container throughput overtook that of Singapore for the first time. Ten internationally renowned classification societies, including Lloyd's Register of Shipping, have set up their subsidiaries in Shanghai. The year 2010 marked the successful completion of Shanghai's implementation of the 11th Five-Year Plan. These five years have been extraordinary and spectacular.
Firstly, rising consumption boosted the economy. Shanghai's total retail sales of consumer goods stood at RMB 603.686 billion, a y-o-y growth of 17.5%;the total sales of commodities in 2010 reached RMB 3.74 trillion, a y-o-y growth of 24.2%. Commerce contributed 20.3% and 23.6%, respectively, to Shanghai's GDP growth and tax revenue growth. It also ranked on top of job creation among all sectors. Besides, commerce attracted 2,087 foreign-invested projects, which is 53.4% of all foreign-invested projects in Shanghai in 2010, the greatest share of all sectors.
Secondly, foreign trade recovered quickly. Our adaptive measures were proven effective. Last year, the total import and export value reached USD 368.87 billion, a y-o-y growth of 32.8% and 12.4% of the national total. Total export grew by 27.4%. Total import grew by 38.5%. Import in 2010 was USD52.27 billion more than in 2009. It was also USD 7.3 billion more than export. Further progress was made in the service trade, whose all-year value was likely to exceed USD100 billion, or a 25% y-o-y growth. Our import and export markets were further diversified. ASEAN countries, Russia, Brazil and other emerging markets became more important. ASEAN replaced Hong Kong to become Shanghai's fourth largest trading partner, accounting for 11.8% of Shanghai's total foreign trade.
Thirdly, the utilization of foreign investment grew steadily, the structure of foreign investment improved further. Paid-in foreign investment in Shanghai reached a record-high USD11.121 billion, a y-o-y growth of 5.5%. Contracted foreign investment reached USD 15.307 billion, a y-o-y growth of 15.1%. By the end of 2010, the accumulative paid-in foreign investment in Shanghai reached USD 106.427 billion. The major characteristics are as follows：
The industrial structure of foreign investment utilization improved further. Of the total foreign investment, 79.4%, 19.8% and 0.8% targeted the tertiary, secondary and primary industries, respectively. Financial services, shipping services, new energy, IT, energy conservation and environmental protection attracted more foreign investment than before. Headquarters economy kept the growth momentum. By the end of 2010, 305 MNC regional headquarters, 213 investment companies and 319 R&D centers had been established in Shanghai, making Shanghai the top city in this regard in mainland China. So far 74 of the Fortune 500 companies have set up their regional headquarters in Shanghai.
Fourthly, investment abroad grew healthily, the "going global" efforts accelerated. 301 overseas direct investment projects, with a total value of USD 2.42 billion, had been approved, a y-o-y growth of 57.5%. USD 6.896 billion had been generated from overseas engineering contracts, a y-o-y growth of 3.6%. USD 645 million had been generated from overseas labour service, with a total of 16,000 workers dispatched overseas. Last year, 28 overseas investment projects exceeding USD 10 million originated from Shanghai, or 79.5% of the city's total overseas investment. Shanghai International Port (Group) Co. Ltd (SIPG) acquired a 25% share of APM Terminals Zeebrugge in Belgium for €27.16 million; Zhong Rong Group purchased a 54.8% interest in Crimson Exploration Inc. in the US for USD99 million. Overseas engineering contracts were concentrated in the four areas of manufacturing and processing, construction, power and telecommunication. Shanghai Electric Group Co. Ltd (SEC) had signed a USD 8.29 billion contract with India's Reliance Power.
There are many other highlights in Shanghai's commerce in 2010.
First of all, we spared no effort to serve the World Expo, doing our bit to make it "successful, exciting and unforgettable", especially in improving frontline services improvement, Expo franchise shops, commerce at the Expo site, and reception of foreign visitors to the Expo.
Secondly, further progress was made in developing Shanghai into an international trade center. We took active steps to set up a development mechanism, speed up the construction of Wai Gao Qiao International Trade Demonstration Area. On Jan. 9th this year, the Ministry of Commerce and the Shanghai Municipal Government signed a cooperative agreement to build a new convention hub that will take up an area of 1.04 square kilometers in the Hongqiao Commercial Area. Once completed, this hub will break Shanghai's convention capacity bottleneck, enable it to become a national center of conventions and exhibitions, boosting the service economy greatly.
Besides, we made further efforts in trade facilitation. We improved the working mechanism and procedures of trade facilitation. A trade facilitation joint meeting mechanism was created, whereby the nine relevant municipal commissions and agencies directly reporting to the Central Government meet regularly to address outstanding issues. As for the approval of foreign investment, we improved the Shanghai Foreign Investment Online and the Foreign Investment Statistics Online Reporting System. Pilots concerning online parallel approval were carried out.
In October last year, the State Council decided to launch a national campaign against IPR violations and counterfeits. Premier Wen Jiabao issued the order, Vice Premier Wang Qishan headed the steering group, and 26 national agencies participated, which demonstrated to the world China's determination in protecting intellectual property rights. Following the plan of the State Council, we set up a leadership team in Shanghai headed by Vice Mayor Tang to lead efforts on cracking down IPR violations and counterfeits. By January this year，administrative organs for law enforcement in Shanghai started investigation into 1,711 cases, closed 1,405 cases, transferred 42 cases suspected of criminal offences to public security agencies, raided 117 counterfeiting hideouts；the municipal public security agencies started investigation into 206 cases, closed 124 cases, the monetary value involved standing at RMB 457 million, caught 360 criminal suspects, made 72 arrests；the municipal procuratorial organs issued 54 arrest warrants for 93 criminal suspects, reviewed 76 prosecuted cases and 112 prosecuted criminal suspects；the Municipal Higher People's Court accepted 97 criminal cases involving 174 suspects in this regard，among which 13 major cases were under the supervision of the office of the national steering group. At the same time, the Shanghai Municipal Party Committee and Municipal Government attached great importance to software IPR protection. All organizations listed in the municipal budget and district-level budgets are intensifying the use licensed software.
The achievements listed above couldn't be attained without the guidance of the Municipal Party Committee and the Municipal Government, or the support of other administrative agencies, districts and counties. Neither were they attainable without the confidence in and enthusiasm for Shanghai's commercial development demonstrated by overseas organizations and multinational companies in Shanghai. Therefore, on behalf of the Municipal Commission of Commerce, I'd like to express our heart-felt gratitude to all of you for your support!
II. Shanghai's development priorities during the 12th Five-Year Plan period, and our plans for developing Shanghai into an international trade center
The recently concluded Municipal People's Congress and People's Political Consultative Meeting drew out the blueprint for Shanghai's development during the 12th Five-Year Plan period. These five years will be an important stage in Shanghai's accelerating efforts on "leading the country in four aspects" and on developing Shanghai into "four centers". These five years will also be critical to the deepening of reform and the transformation of our economic growth model. We'll stress “the driving force of innovation driven and the transformation of growth model" in all processes and areas of socio-economic development. We'll go all out to fulfill the "six basic requirements"，that is, deepening reform and open-up, accelerating the strategic industrial restructuring, people-oriented social development and administration, integrated urban and rural development, better energy conservation and environmental protection, carrying the fundamental strategy of the rule of the law.
Our socio-economic development objectives during the 12th Five-Year Plan period are：to make decisive progress in the development of "four centers" and a socialist modern international metropolitan city; to pioneer breakthroughs in the transformation of economic growth model; to make significant improvement in the standard and quality of people's life.
Regarding Shanghai’s Four Centers Initiatives, since detailed explanations have already been given on the development of Shanghai into an international financial center and an international shipping center, I'll focus on developing Shanghai into an international trade center. The development of Shanghai into an international trade center offers strong support to the development of an international center of finance and trade. The development of "four centers" complements and reinforces each other.
The guideline for Shanghai's development into an international trade center is：further open up the market, better facilitate trade, accelerate the development of a modern market system focusing on factor markets and consumer services, accelerate the development of a world-class environment for business and commerce, turn Shanghai into a modern international metropolitan cities with vast business oppotunities, low comprehensive cost, orderly market, attracting business and consumers near and afar. The development objective is：an international trade center that allocates both international and domestic resources, serves the Yangtze River Delta as well as the rest of the country, matches China's status in economic and trade terms, and possesses an advanced modern service industry, should take shape by 2020.
The priorities in Shanghai's development into an international trade center are:：
1、Further open up the market and better facilitate trade.
2、Drive industrial structure optimization by trade and circulation of commodities.
3、Establish a market system capable of allocating market resources domestically and internationally. We'll establish a market system for the trade in goods, pay particular attention to improving the futures market for input factors and the wholesale market system the reaches the entire country. We will build market systems for the consumption of goods and services, for trade in service, for e-commerce, for professional services. We'll also build a trading platform with international standing for commodities and resources.
4、 Attract dynamic high-calibre trading players, which includes: attracting major domestic and international enterprises, regional headquarters, enterprises run on new models of international trade, domestic and international trading organizations, trade promotion bodies and industry associations.
5、Develop the "three ports and three zones" in Pudong, Hongqiao Business Area, and the former Expo site.
6、Develop a world-class environment for commerce and trade.
7、Establish an administrative system that fits the international trade center.
We're now drafting a plan for the development of Shanghai into an international trade center during the 12th Five-Year Plan period. The development orientation is, in these five years, form the basic framework for comprehensive international trade, promote the construction of 10 trading platforms that serve the entire country, which include platforms for large-scale conventions and exhibitions, for overseas marketing network, for technology import and export, for on-line international trade, for commodities trading, for modern service clusters, for consumption, for the release of international financial information, for international trading bodies to communicate with each other, so that we can better serve the country as well as the world.