Compilation of the Legal Instruments on China’s Accession to the World Trade Organizations

Chapter Four: 2002 Social and Economic Development of the Pudong

　　Part One Macroげeconomic Picture in
the Pudong New Area
　　1. Total GDP and Growth Rate
　　In 2002, the economy in the Pudong New Area has maintained the momentum of fast growth with total GDP reaching RMB125.116 billion, representing an increase of 16.7％ over 2001, 0.6 percentage point higher than that of 2001. There has been a quarterげbyげquarter upward tendency in overall economic growth. As a result, the contribution of the GDP of Pudong to that of Shanghai has gone up to 23.1％ in 2002, compared with 21.9％ in 2001.
　　II. Change in Total Industrial Output and in Structure
　　In 2002, no apparent structural changes were found as the Secondary and Tertiary Industries remained the major driving forces of economic growth in the Pudong New Area. The output of the Primary Industry stood at RMB637 million, accounting for 0.5％ of total GDP; the output of Secondary Industry RMB66.192 billion, accounting for 52.9％; and the output of Tertiary Industry was RMB58.287 billion, accounting for 46.6％. Compared with the same period last year, the contribution of the Tertiary Industry to the GDP of Pudong dropped from 47.3％ owing to the strong momentum of growth in the Secondary Industry.
　　III. Change in Total Investment and in Structure
　　Total investment in fixed assets reached RMB58.661 billion in 2002, up by 41％ compared with that of 2001. The year 2002 has become another year of big investment ever since the New Area first started, demonstrating for a second time the strong position of Pudong as a contributor to 1/4 of total investment of Shanghai.
　　Of total investment, the part in real estate reached RMB21.521 billion, representing an increase of 92.7％ over 2001 and accounting for 36.7％ of the total; the part in urban infrastructure RMB14.418 billion, up by 36.8％; and investment in key projects stood at RMB 22.558 billion, accounting for 38.5％, making 2002 a prime year for investment in terms of the number and scale of key projects. Besides, nonげstate investment mainly composed of foreign and private investment experienced a surge of 56.2％, reaching RMB42.251 billion. As a result nonげstate investment accounted for 72％ of total investment, up by 8 percentage points over that of 2001.
　　IV. Change in Total Consumption and in Structure
　　In 2002, Pudong enjoyed a boom in social consumption. Total retail volume for social consumption reached RMB25.62 billion, representing an increase of 9.9％ over the same period last year, 1.6 percentage points higher. Of the total, commercial retail volume was RMB22.369 billion, representing an increase of 11.5％ and accounting for 89.1％; retail volume for catering business was RMB2.987 billion, representing an increase of 5.5％ and accounting for 11.7％.
　　V. Total Foreign Direct Investment and its Composition and Changes
　　There were altogether 964 projects contracted in 2002 in Pudong involving foreign direct investment, representing an increase of 9.5％ compared with 880 projects in 2001. Contracted foreign investment totaled USD2.668 billion, up by 33.3％. The funds that actually arrived increased to USD1.847billion. 　　As far as the composition is concerned, modern service industries attracted approximately USD1 billion, 1/3 of total contracted overseas investment, representing an increase of 78.9％. The Secondary Industry in Pudong managed to obtain a contracted foreign investment of USD1.456 billion, an increase of 46％.
　　The year 2002 has seen a noticeable trend of multinational companies moving their regional headquarters and R＆D centers to Pudong. Among the first 8 multinational companies, approved in 2002 to locate their headquarters in Shanghai, 5 of them have settled down in Pudong, including Alcatel, Mitsubishi Corp., Fuji Film, Delthi and Honeywell.
　　Before and after China's accession to the WTO, foreign direct investment changes show that the number of exclusively foreignげinvested projects has surpassed that of joint ventures. In 2002, exclusively foreignげinvested projects involving USD1.722 billion account for 64.5％ of total foreign investment of USD 2.668 billion.
　　VI. Total Volume of Imports and Exports and Their Structural Changes
　　Total exports in 2002 reached USD13.606 billion, up by 18.14％ over 2001 while total imports reached USD23.296 billion, up by 24.13％. Exports from stateげowned enterprises (SOEs) accounted for 48.85％ and 38.17％of the total exports and imports respectively, with steadily declining proportions.
　　Minerals and Chemicals enjoyed the most substantial growth of 34.74％ with a total export volume of USD1.22 billion, followed by light industrial products which grew by 20.01％ with a total export volume of USD1.47 billion. Textile ＆ clothing exports and electromechanical exports also increased remarkably by 16.79％ and 16.25％ respectively. Integrated circuits and microelectronic component exports increased by 45.7％. But textile exports increased only by 7.0％, much lower than what was expected. Complete TV and radio sets suffered negative growth, so did grain, oil and natural produce with a negative growth of 7.46％.
　　Imports grew quite as expected. Although import of such major agricultural products as grain remained stable, the import of edible oil scored a 5げfold increase. Auto imports grew by more than 90％. Contrary to earlier expectations, this hasn't exerted any strong impact on the market because the base of the previous year was very small. While steel exports contracted, its imports increased by 50％. Other products enjoying a high growth in import include integrated circuits and microelectronic components, automatic dataげprocessing equipment, electric motors and power generators, printing machinery and various liquid pumps.
　　VII. Employment
　　Employment in Pudong has continued to expand, stimulated by the rapid growth in economy, investment, consumption and exports. In 2002, the number of new recruits reached 10980, of which more than 80％ were employed by the Tertiary Industry. However, the number of unemployment has also been on the increase, topping 50,000 in July and reaching 51,131 in August as July and August is the busiest jobげhunting period for school graduates. By the end of 2002, the number of the unemployed under registration has reached 51,310. 　　Part Two Trade Regulation
in the Pudong New Area
　　I. Pilot Project of Direct Registration for Foreignげinvested Enterprises
　　In line with the commitments by the central government, the Commercial and Industrial Administration Bureau, together with the Economic and Trade Bureau of the Pudong New Area, now handle business by joint examination and approval after cases are accepted by one bureau, each fulfilling their respective obligations and closing each case by a specified time limit. Their specific operational procedures were streamlined and professional clerks put in place. The Technical Surveillance Bureau has also made adjustments accordingly to process each application promptly against the official approval of the establishment of foreignげinvested enterprises and the name list of the enterprises. And it issues relevant business operation code online.
　　II. Standardization and Transparency Improvement of Governmental Regulation of Trade
　　All government agencies of the New Area were required to sort out the contents of examination and approval for disclosure. An itemげbyげitem check was conducted to produce standardized format and forms for accuracy and userげfriendliness. At the same time, transparency is improved in that the contents are to be made public timely by printed notification and online notification through “Pudong on the Web”. By the enforcement of “the Measures on the Investigation of Responsibility for Administrative Errors” and “the Measures on the Supervision and Monitoring of Administrative Efficiency”, the Pudong Economic and Trade Bureau has further improved its supervision and monitoring system.
　　III. Education and Enforcement of Intellectual Property Rights (IPR) Protection 　　To promote IPR protection, the system of joint conferences involving many government functional departments has been adjusted and improved. To strengthen the enforcement of IPR protection laws, efforts have been intensified to improve judicial trials, rectify the order of the market for cultural products and reinforce quality and technical surveillance. To popularize relevant laws and regulations, training has been intensified among government agencies and science and technological enterprises with trained officials and employees of over 1500. Besides, activities have been carried out in over 800 townships, villages and residential communities of Pudong New Area to increase the awareness of IPR protection. A pilot patent program has been launched to give enterprises due assistance in institutionalizing the work on patent and organizing professional groups and to establish a multiげfunctional and comprehensive patent database including both domestic and foreign patent information and a patent searching system. So far, online searching for patent journals and latest patent notifications has become possible on the Pudong Science and Technology Web and the Science and Technology Electronic Administrative affairs System. As a result, the number of patent applications in 2002 reached 2379, representing a 1.17げfold increase over 2001, securing Pudong the second place in the total number of applications in all the districts and towns in Shanghai.
　　Part Three Development of Different
Sectors in Pudong
　　I. Major Industries Related to Trade in Services
　　1. Retailing service industry
　　China's accession to the WTO has brought about greater opportunities for the development of retailing services in Pudong. From June 1997 when the first superげmarket was opened in Pudong till today, 8 superげmarkets, each occupying a floor space of over 5000 square meters, have settled down in Pudong. This new business pattern rising rapidly in Shanghai's commerce has gained dominance in Pudong, growing the fastest and showing little difference from their international counterparts. In September 2001 and in July 2002, the Lotus's second and third superげmarkets were opened successively.
　　2. Value Added Telecommunication Service
　　The Shanghai Symphony Telecommunication Co. Ltd. was specially approved before China's accession to the WTO by the State Council to deal in value added telecom business in Pudong.
　　3. Banking
　　By the end of September 2002, 90％ of the Chinese and foreign financial institutions in Shanghai have their headquarters or branches located in Pudong. 20 foreign banks have upgraded their Shanghai branches located in Pudong to “Major Reporting Banks”. 4 other banks have located their China headquarters in Pudong.
　　As a concentration area of the financial industry, Pudong has maintained a stable and healthy development in the financial sector since WTO accession. By the end of 2002, the RMB deposits held by Chinese financial institutions have reached RMB194.495 billion, up by RMB40.714 billion over the beginning of the year. The outstanding loan has amounted to RMB139.263 billion, an increase of RMB19.594 billion over the beginning of the year. The balance of both local and foreign currency deposits held by foreign banks reached RMB37.4 billion after conversion, the outstanding loans RMB76.0 billion, both occupying over 90％ of the total amount held by foreign banks in Shanghai..
　　In 2002 the WTO accession has exerted considerable impact on the financial industry in Pudong. Positive effects are as follows: The first is the service symbiosis thanks to the agglomeration of financial institutions. The present customer base of the financial institutions are largeげsized premium businesses that need large loans and only branch banks and up have the corresponding credit and loan granting authority. Therefore, Pudong can offer much better services to those businesses than other districts and regions in Shanghai. In addition, the Central Bank administered functions like supervision and regulation of monetary policies and foreign exchange are performed in Pudong. The advantage is obvious. The second is the brand name effect. Now that the name of Lujiazui of Pudong has become synonymous with financial center, it is naturally an important factor in the decisionげmaking to major financial institutions and big companies in coming to Pudong from home and abroad. The third is the effect on the development of the financial industry. With so many financial institutions gathering in Pudong, it plays a crucial role in expanding financial services, promoting financial infrastructure construction, creating job opportunities, applying new and high technology in the industry, and contributing to the growth of GDP. The fourth is the research and innovation impetus created by the high concentration of financial institutions and headquarters in Pudong. Especially the location of major function departments of the Central Bank in Pudong has facilitated information sharing and communications, very helpful to research and innovation in commercial banks.
　　Meanwhile, the positive impact of the accession on the financial industry in Pudong has not fully revealed itself in the first year of WTO membership. So far of Chinese banks only 60％ of branchげlevel and up institutions and 1 head office have their presence in Pudong, and of foreign banks only 4 have their head offices in Pudong.
　　4. Insurance
　　With the coming of John Hancock ＆ Tian'an Life Insurance Company and the Shanghai Branch of China Reinsurance Company in 2002, more than 20 insurance companies from home and abroad have settled down in Lujiazui. Of them, about 50％ are foreign insurance companies. By the end of 2002, the premium income of both Chinese and foreign insurance companies has come to RMB14 billion, a dramatic increase of 100％ over 2001.
　　5. Tourism, Conference ＆ Exhibition Industry
　　Tourism, Conference ＆ Exhibition have emerged in recent years as a new industry in Pudong. Particularly, scenic spots like the Oriental Pearl TV Tower, the Jinmao Tower and the Century Park have become the tourism highlights in Shanghai. In 2002, Pudong received 7.432 million tourists from home and from abroad, and earned RMB3 billion, up 62.38％ and 29.48％ respectively over the previous year. By the end of October 2002, over 30 international conferences have been held in Pudong, including the annual board meeting of IBM, Master Card, and the Asian Development Bank and the Ministerial Meeting of Telecommunications of APEC.
　　6. Medical care service
　　At present there are one sinoげforeign cooperative hospital and one joint venture hospital in Pudong. No new hospital of either type was set up in 2002.
　　7. Education
　　At present in Pudong there are such international schools as the American School, Concord International School of Shanghai, and the International Division of Shanghai Jincai Senior High School. The sinoげforeign cooperative schools are mainly in the two areas of preげschool education (Fortune Kindergarten for instance) and higher education (ChinaげEU International Business School).
　　II. Major Industries Related to Trade in Goods
　　1. Steel
　　In 2002, the output of Pudong's refined steel products totaled RMB6.228 billion, up by 18％ over 2001, lower than the average industrial growth rate of 21％ in the area. But the output of finished steel products increased by 19.7％, slightly more than that of the last year. Implementation of the WTO commitments hasn't led to direct negative effects.
　　2. Textile ＆ Clothing
　　In 2002, the production of Pudong's textile ＆ clothing totaled RMB9.042 billion, up 18.3％ over the previous year, 2.7 percentage points lower than the average industrial growth rate in the area. With the industrial restructuring, the textile ＆ clothing industry, not a key industry in Pudong, now accounts for only 4.1％ in the New Area and will see its share decreasing from year to year. 　　3. Household Electrical Appliances
　　In 2002, the production of Pudong's household electrical appliances suffered a negative growth, totaling RMB12.595 billion, down 6.6％ from the previous year. This fall had to do with the output reduction by large enterprises like Shanghai Suoguang Visual (SSV). The volume of color TVs and airげconditioner compressors decreased by more than 14.4％ and 17.9％ respectively over the previous year. Although the decline in some way could be attributed to the industrial policy adopted by the new area, it has also reflected the impact of WTO accession.
　　4. Petrochemical Industry
　　In 2002, the volume of Pudong's petrochemical and refined chemical production totaled RMB27.24 billion, up by 7.8％ over the previous year. Thanks to a dramatic increase in the fourth quarter, annual output has picked up from a drop of 1.5％ during the previous three quarters. As one of the key industries in the New Area, its negative growth in 2002 was directly due to a decrease of 61 thousand tons in crude oil processing in Gao Qiao Petrochemical compared with that of the previous year. It has also demonstrated the impact of WTO accession.
　　5. Bio and Pharmaceutical Industry
　　In 2002, the volume of Pudong's biomedical production totaled RMB6.405 billion, up by 31.4％ over the previous year. This industry is one of the key industries in “the 10th Fiveげyear Plan” of the New Area. Although it occupies only 3.9％ of the total industrial output at present, its share of hiげtech content has reached 58.4％, exceeding the share of total hiげtech production in the New Area (41.6％) by 16.8 percentage points. In this sense, the accession has led to more room and opportunities for the development of Pudong's hiげtech bio and pharmaceutical industry.
　　6. Automobile
　　In 2002, Pudong's automobile production totaled RMB31.233 billion, up by 65％ over the previous year. The predicted negative impact from the WTO accession on the automobile industry has not shown so far. More will have to be found out in the future.
　　III. Agriculture
　　In 2002, the GDP of Pudong's Primary Industry reached RMB637 million, up 4.8％ over the previous year. Because of the small share of the Primary Industry in Pudong's total GDP which is decreasing continuously, and a sharp drop in grain planting in recent three years as a result of the adjustment of crop growing patterns, grain production here mainly serves for local consumption. Therefore, there has been little effect on agriculture in the New Area after WTO entry.
　　