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In the year after China's accession to the WTO, along with national endeavors fulfilling accession commitments, palpable impact is seen in Shanghai on its economic growth, economic structure, foreign direct investment, foreign trade, employment and opening to the outside world.
Part One Economic Structure and Growth
¡¡¡¡I. Total GDP and Growth Rate
¡¡¡¡In 2002, the economy of Shanghai enjoyed sound development, maintaining a high growth rate boosted by strong internal and external demand. GDP of Shanghai from January through December reached RMB540.876 billion, up by 10.9£¥ over the same period last year in terms of comparable prices, GDP growth rate 0.7 percentage point higher than last year.
¡¡¡¡Of economic growth, GDP in the first quarter grew by 9.6£¥, lower than last year's average. The rate, however, picked up steadily from the second quarter, hitting 10£¥ in the first half of the year, followed by a remarkable growth of 11.5£¥, 11.9£¥ and 11.8£¥ in July, August and September respectively. In the fourth quarter, growth rate reached 11.8£¥ for both October and November. Therefore, the growth rate in the second half of 2002 is expected to be higher than the first half.
¡¡¡¡II. Total Output of the Three Industries and Their Respective Contributions to GDP
¡¡¡¡From January through December 2002, the Primary Industry has realized added value of RMB8.824 billion, increasing by 3.0£¥, the Secondary Industry RMB256.469 billion, up by 12.1£¥ and the Tertiary Industry RMB275.583 billion, up by 10£¥.
¡¡¡¡In terms of growth contribution, the Secondary and Tertiary Industries continued to play a dominant role in the economy of Shanghai, accounting for 53.5£¥ and 46£¥ respectively. Amongst the three, the Secondary Industry, with a contribution rate of 50.9£¥, has grown rapidly, becoming the major driving force to the overall economic increase.
¡¡¡¡III. Total Investment, Investment Structure and Change in Structure
¡¡¡¡With the deepening reform of investment and financing system, 2002 has witnessed a new round of investment boom, with investment in fixed assets rising dramatically. From January through December, social investment in fixed assets totaled RMB215.841 billion, representing an increase of 8.2£¥ over the same period last year. Firstly, the city has intensified its investment in key projects including urban infrastructure and industrial projects, which in turn has stimulated the rapid growth in basic construction investment. Completed investment from January through December involved RMB78.413 billion, up by 10.1£¥ over the same period last year, and 8.8 percentage points higher than the growth of the same period last year. Secondly, there has been a rapid increase in investment in real estate development. The completed investment in real estate development from January through December came to RMB72.023 billion, an increase of 14.2£¥ over the same period last year, 2.8 percentage points higher than that of the same period last year. Thirdly, private investment has increased rapidly with completed investment from January through December reaching RMB101.073 billion, up by 15.9£¥ over the same period last year. Expanding into more areas of various industries, private investment accounts for 46.8£¥ of the total investment, 3.1 percentage points higher than the corresponding period last year.
¡¡¡¡IV. Total Consumption, Consumption Structure and Change in Structure
¡¡¡¡In 2002, there has been a steady increase in consumption as a result of market construction and restructuring. From January through December, the total social retail sales reached RMB203.521 billion, an increase of 9.3£¥ over the same period last year, 1.2 percentage points higher than that of the same period last year. In terms of growth distribution, there has been a steady monthly growth of 7£¥ except for the 0.8£¥ growth in January owing to the Spring Festival. At the same time, people's purchasing power has continued to rise, featured by the rapid increase in the purchase of automobiles, home electrical appliances and other sought£after consumables. Auto retail sales from January through December reached 54,700, up by 26.8£¥ over the same period last year. Boosted by the housing purchase, decoration materials, furniture, home electrical appliances have all enjoyed a booming market. For example, from January through December sales of household air£conditioners grew by 13.3£¥ over the same period of last year, color TV sets over 25 inches 8.0£¥, automatic washing machines 25.6£¥. Sales of information and telecommunication products also grew by a large margin, among which mobile phones rose by 51.4£¥. The catering business has maintained a strong momentum of growth. From January through December, total turnover of the catering business in Shanghai reached RMB18.423 billion, representing an increase of 30.1£¥ over the same period last year. Besides, consumption of services like cultural enjoyment, entertainment and leisure is booming. According to a sample survey, average per capita consumption of services in urban households reached RMB3033 from January through December, up by 22.2£¥ over the same period last year.
¡¡¡¡V. Employment
¡¡¡¡By June 2002, the registered unemployment rate of Shanghai has reached 4.8£¥ with a total unemployed population of 287,800, slightly higher than 257,000 in December 2001.
¡¡¡¡China's accession to the WTO has led to the growth in the export of traditional products, foreign direct investment, the Tertiary Industry and GDP, which in turn is sure to have a positive impact on job creation in the long run. It must be admitted, however, that Shanghai will become under employment pressure in the short term. Particularly, the oversupply of labor force will worsen while the existing structural problem of labor force will become even more prominent. There will be a great demand for high quality labor force with the emergence of new industries and new economy after China's WTO accession. Furthermore, with increasing foreign investment, lower tariff rates which mean lower barrier to the import of new technology and equipment, Shanghai will need more high£quality and skilled technical workers than ever before to meet the new demand. However, most of the unemployed in Shanghai are workers that have received inadequate education or training. This will inevitably exert a negative impact on Shanghai's new round of industrial upgrading after the accession.
¡¡¡¡Part Two Foreign Trade and Opening Up
¡¡¡¡I. Import and Export
¡¡¡¡Confronted with the tough situation in export at the beginning of 2002, Shanghai has taken a number of measures to vigorously explore the international market, such as promoting the key reform on the examination and approval system for foreign trade rights, introducing purchasing centers for multinational companies, and initiating the £àEasy Clearance System'. As a result, export growth climbed up month by month. From January through December, total exports in Shanghai reached USD32.05 billion, representing an increase of 16.01£¥ over the same period last year, 11.27 and 10.4 percentage points higher than the growth of the first quarter and the first half of the year respectively. Particularly, export growth rate reached about 20£¥ in July and August and 39.7£¥ in December. First, hi£tech export reached USD7.48 billion, up by 37.8£¥, 21.8 percentage points higher than the city's average export growth. Second, export to the USA and Hong Kong has maintained a rapid increase while the growth of export to the EU and Japan has slowed down. From January through December, exports from Shanghai to the USA totaled USD7.32 billion, up by 24.13£¥ and exports to Hong Kong also increased by 18.89£¥, whereas those to Japan and the EU only grew by 9.57£¥ and 6.38£¥ respectively. Third, general exports increased rapidly, evidenced by a total volume of USD13.711 billion and an increase of 23.9£¥. Exports for processing trade reached USD17.419 billion, up by 10.75£¥.
¡¡¡¡Total foreign trade volume via the port of Shanghai also recovered in the second half of 2002. From January through December, total foreign trade volume via Shanghai port reached USD142.5 billion, increasing by 18.3£¥ over the same period last year. Total import and export stood at USD81.8 billion and USD60.7 billion, representing an increase of 20.3£¥ and 15.7£¥ respectively. Speaking of imports, those from Asia amounted to USD34.84 billion, up by 22.4£¥ while those from Europe amounted to USD14.195 billion, up by 8.6£¥ and from North America USD8.339 billion, up by 3.9£¥, among which those from the USA reached USD7.351 billion, up by 8.2£¥.
¡¡¡¡II. Attracting Foreign Investment
¡¡¡¡To take advantage of the opportunities offered by world£wide industrial restructuring and China's accession to the WTO, Shanghai has further improved its investment environment and made great efforts to attract foreign capital. As a result, foreign investment has maintained the momentum of growth in Shanghai. From January through December, there have been altogether 3,012 signed contracted projects involving foreign direct investment (FDI) in Shanghai, an increase of 22.5£¥ over the same period last year. The contracted investment reached USD10.576 billion, up by 43.4£¥, and the capital already available for use reached USD5.03 billion, up by 14.5£¥. The initial positive impact of the WTO accession on foreign investment begins to be revealed in Shanghai, which has enjoyed a dramatic FDI growth in such typical areas of the Tertiary Industry as finance£¬telecommunications and logistics. From January through December, the number of contracted projects in the Tertiary Industry reached 1,381, involving contracted capital of USD3.573 billion, representing an increase of 22.8£¥ and 93.6£¥ respectively over the same period last year. The share of the Tertiary Industry in total contracted foreign investment is 8.7 percentage points higher than that of the same period last year.
¡¡¡¡III. Opening to the Outside World
¡¡¡¡The implications of China's accession to the WTO on Shanghai's economy have become increasingly apparent. Within one year after the accession, Shanghai has accelerated the opening in trade in services, finance, industry, scientific research, and urban modernization construction in compliance with the accession commitments made by the Chinese government. Since the beginning of 2002, Shanghai has strengthened its cooperation with foreign companies in promoting the opening of information services, foreign trade, commerce, tourism, education, medical care and hygiene, intermediary services and modern logistics, thereby enhancing the competitiveness of its trade in services. As China's economic center, Shanghai has been earnestly carrying out financial policies formulated by the state and steadily opening up its securities, money and insurance markets to attract more foreign investment into the financial sector. It has promoted the establishment of joint venture commercial banks, insurance, securities and fund£management companies. Meanwhile, it is exploring ways to conduct offshore financial business. In this way, the agglomeration of various kinds of financial institutions will speed up the process of building Shanghai into an international financial center. What's more, its unique advantages in geographical location, human resources and urban amenities have made the city an ideal place for multinational companies to establish headquarters in. Study of appropriate policies and measures has been conducted to try to create comfortable conditions facilitating the operation of regional headquarters of multinational companies in Shanghai. With regard to industry, Shanghai has put premium on the large£scale in developing projects, bases and enterprises and expanded its ways of cooperating with internationally prestigious companies. As a result, Shanghai has developed 4 industrial bases of world£class size, including the Zhangjiang Integrated Circuits and Microelectronics Industrial Base, the Shanghai Chemical Industrial Zone, the Shanghai International Automobile Town and the Baoshan Steel Complex. To promote the strategic transformation of state£owned enterprises, Shanghai has been vigorously exploring methods like mergers and acquisitions and transfer of equity to attract foreign capital in the restructuring of the state sector. Backed by the rich human resources from universities and research institutes, the city has been trying to improve its innovative ability through introducing more foreign start£up funds to provide venture capital investment and expanding international cooperation and exchange in scientific research and education. Shanghai has been encouraging foreign financial institutions and productive factor markets to move to Pudong, multinationals to establish in Pudong their research and development centers, manufacturing bases and regional operation and management headquarters, making Pudong the major future point of growth in Shanghai.
¡¡¡¡The remarkable increase in the number of expatriates in Shanghai has demonstrated Shanghai's progress in opening up in the year after the accession. According to the latest statistics, the number of expatriates in Shanghai has surpassed 300,000. They come from 119 different countries and regions. In the first half of 2002, the number of foreigners who have registered for employment increased by 31.79£¥ with new applications approved reaching 3836, 43£¥ more than that of the same period last year.
¡¡¡¡Part Three¡¡Tariffs
¡¡¡¡Since January 1, 2002, China has started to formally carry out its 2002 tariff concession obligations under the accession commitments and relevant agreements of joining the Bangkok Convention. It has adjusted its import and export tariff headings and tariff rates after these commitments and agreements were examined and adopted by the fourth session of the plenary meeting of the Tariff Commission of the State Council and approved by the State Council.
¡¡¡¡Shanghai Customs has executed the relevant tariff policies promulgated by the General Administration of China Customs.
¡¡¡¡Appendix 1, 2 and 3 illustrate the total foreign trade volume of Shanghai reported by the Shanghai Customs (including import and export data, rank of export destinations, the export of bulk commodities).
¡¡¡¡On the whole, the economic performance in Shanghai is better than expected since China's accession to the WTO. Shanghai, while honoring WTO commitments, has enjoyed steady momentum in its social and economic development. There have been rapid increases in three industries, particularly, the Tertiary Industry in which financial, trade and intermediary services have scored substantial growth. Therefore, the positive impacts of the accession on reform, opening and development have started to reveal.
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