Shanghai to preserve its industries

Municipal government wants manufacturing to contribute at least 25 percent of the city's GDP

The municipal government of Shanghai has pledged to prevent manufacturing from declining too quickly in China's largest business city.

By the end of 2014, the latest year for which figures are available, the city had more than 24 million permanent residents - equivalent to the population of Australia.

As befits a municipality of this size, service industries have increasingly begun to eclipse manufacturing's contribution to local GDP, but the latter should still contribute at least 25 percent, according to the city's 13th Five-Year Plan (2016-20).

This year, municipal officials are aiming to achieve a GDP growth rate of between 6.5 and 7 percent year-on-year.

However, according to Tang Huihao, chief economist at the municipal bureau of statistics, it will be hard for Shanghai to achieve sustainable growth in its modern service industries without a solid manufacturing base.

Xiao Lin, director of the city government's development research center, said this was the first time that Shanghai, the country's oldest industrial center, had refocused on manufacturing and set a floor for its decline.

Economists say it is important not to let manufacturing wither away when much of the city's new wealth is being created by its financial houses and service industries.

Citywide, the contribution to GDP by all service industries rose rapidly from 57 percent in 2010 to 64.8 percent in 2014 and 67.8 percent last year.

However, the city still wants to play a key part in the central government's "Made in China 2025" campaign to boost manufacturing quality, Xiao said.

Shanghai's focus should be on high-end and intelligent manufacturing, the official said, featuring smarter, more environmentally-friendly and service-oriented technologies.

Preferably, Shanghai should try to enlarge manufacturing's contribution to local GDP to between 30 and 35 percent "not only in the following five years, but for a longer time", said Wang Sizheng, an official from the municipal Development and Reform Commission.

As the population gets older and the city increasingly loses its price competitiveness in comparison with other cities in China and further afield, "innovation becomes the only way to go" for manufacturers, according to Rui Mingjie, a professor with Fudan University.

Shanghai is capable of leading the country in several industries, including semiconductor equipment and materials, industrial robots, making the homegrown airliner C919 and constructing luxury cruise ships.

Xu Zheng, chairman of Shanghai Construction Group, pointed to the city's skyline as proof of it embracing new technology.

"Shanghai Tower is the last piece in the trio of skyscrapers on Lujiazui's skyline. To construct a 632-meter-tall building with a total gross floor area space of 576,000 square meters, we have relied a lot on state-of-the-art innovative technology," he said.

Six years ago, Shanghai Construction Group spent several million yuan on research into building information modeling technology, and the Shanghai Tower is the first application of this, Xu said.