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    China Business
     Jan 10, 2006
Services seen as key to future

SHANGHAI - According to a development research center, part of Shanghai's municipal government, the city will further improve its industrial structure and give priority to development of modern service industries in the coming five years.

Shanghai will base growth of a modern service industry on a "digitization drive", and also put the financial and logistics sectors high on the development agenda for the 2006-10 period. Over the next five years, the city plans to build itself into an information-service center, home to international information-services groups, and one of the telecommunications hubs for the whole Asia-Pacific region.

The research center predicted that the information sector in Shanghai would realize 100 billion yuan (US$12.4 billion) in value-

added output by 2010. The financial sector expects to realize 150 billion yuan in output value, or more than 10% of the city's gross domestic product (GDP). The logistics sector will claim another 10% of the local economy by then, with annual container turnover reaching 25 million TEUs (twenty-foot-equivalent units) and annual air cargo turnover at 3.2 million tons.

Between 2006 and 2010, Shanghai will build a group of digital cultural bases and parks and speed up the development of education, training, sports and entertainment. The cultural industry is expected to generate 50 billion yuan in value-added output annually. Major expansions are also anticipated in Shanghai's exhibition-business, tourism and community services sectors. By 2010, the city expects to organize 400 international exhibitions and 1,000 international conferences each year.

As part of Shanghai's efforts to boost the service sector, an association of modern service industries was established at the end of last year, covering the financial, logistics, commerce, real-estate, information-services and exhibition sectors.

Services sector promoted
Last autumn, Shanghai Mayor Han Zheng remarked at the 17th International Business Leaders' Advisory Council for the Mayor of Shanghai that the city would step up its efforts to develop a modern services sector to enhance its global competitiveness and transform itself from a manufacturing-based to a services-based economy.

He said that to become an international economic, financial, trade and shipping center, the city will speed up construction of functional clusters in both urban and suburban areas and foster a number of large and competitive service groups. Priority will be given to financial services, logistics and information technology sectors, said the mayor.

Long Yongtu, secretary general of the Boao Forum for Asia, endorsed Han's efforts. Long said developing a modern services sector will help upgrade manufacturing industries, and create more jobs for rural residents. He encouraged the city to develop retailing, logistics, tourism, entertainment and catering industries.

To develop a modern services sector, Long believes Shanghai should integrate resources throughout the Yangtze River Delta region. "Shanghai should take the lead in breaking the restrictions of administrative divisions, allowing a free flow of goods, capital and labor," he said. Long also called for the breaking of boundaries separating administratively divided industries, including air, land and sea transport, calling for the three transport systems to be better integrated to achieve higher efficiency.

Another aspect Long and other business leaders emphasized was a better environment. Developing a modern services sector requires a transparent and predictable legal framework and high-quality administration. Samuel Dipiazza, chief executive officer of PricewaterhouseCoopers, noted that a fair and properly enforced legal and regulatory environment is very important for a city wanting to attract high-level service organizations.

As China's economic hub, Shanghai has taken the lead in the development of a modern service sector. When the council first opened in 1989, the added value of the city's tertiary industries accounted for less than 30% of its GDP. Now it makes up nearly half the city's GDP, while in urban areas the proportion reaches 70%.

(Asia Pulse/XIC)

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