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By Wang Bo and You Nuo (China Daily)
Updated: 2009-05-25 08:04

Enough evidence can be drawn from the first quarter data for this year. At the end of 2008, except Beijing, in no regional economy was the share of services larger than 60 percent of the local GDP, when the so-called tertiary industry (statisticians' term for services) accounted for only 40.1 percent of the national GDP in 2007 - even lower than 2002's record high of 41.5 percent.

In the first quarter, it was only with the difficulties for the manufacturing sector, did Shanghai see its share for services exceed 60 percent (60.2 percent to be exact) in GDP - based on an annualized sectoral growth of 13.1 percent, four times faster than that of the city's whole economy. In contrast, in industry and construction, the city only saw an annualized net decline of 8.1 percent. Many other coastal cities and provinces, like Zhejiang, Guangdong and Fujian also reported over 10 percent growth in services during the same period.

New plans

Local officials in coastal cities are now yearning for more policy leeway for their urban programs. The two cities with securities' exchanges, Shanghai and Shenzhen (sharing border with Hong Kong), have already got the nod from the central government to expand urban land and boost their service industry.

Shanghai has decided to incorporate Nanhui, a former suburban district far away from the urban center, into its Pudong development area. More urban land will allow the city to build more modern service facilities that it will need to become a financial and logistics service center in the world.

In the next couple of years, many new exchanges will be launched in the city for various commodities and securities.

Manufacturing, at the same time, will become focused - and concentrate on operations that are globally competitive, such as the building of sophisticated equipment. Industrial operations that envisage high consumption of resources or those with high emission will be entirely phased out.

A similar service-oriented development plan will also be adopted by Shenzhen - and probably by more coastal cities later this year.

Of course, all these urban development plans are only in the nascent stage. Larger urban areas and more buildings do not necessarily make cities more competitive and attractive to visiting business people. To reconfigure a city's service industry would require a lot more things to be done, from the government's public services to the responsiveness of the local labor market.

Cities don't compete by size. Rather they compete by creating their own unique business environment.

Workers manufacture toys at a factory in Shantou, Guangdong province. [Agencies]

 

 

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