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The economic development in Shanghai in 2017

Feb 6, 2018

The Shanghai Municipal Government’s Information Office held a press conference on January 19 on the city’s economic development in 2017. Following are the highlights:


Tang Huihao, deputy director, Shanghai Statistics Bureau I have a question on the strategic new industry of manufacturing. The total output of new energy automobile manufacturing rose by nearly 50 percent among strategic new industries, which is a highlight. Is it a trend and characteristic of the development of strategic new industries in Shanghai last year?


Tang Huihao: In 2017 the output of the manufacturing sector among strategic new industries in Shanghai reached 1.05 trillion yuan (US$164.06 billion), rising 5.7 percent over 2016, and the rise was 4.2 percentage points higher in 2017 than in 2016.


As for industries, as you just mentioned manufacturing and sales of new energy cars yielded good results, rising 42.6 percent over 2016. The rise was mainly thanks to free car plate policy and financial subsidy for new energy cars, and at the same time the total output of the new energy car sector is still relatively low. Apart from the new energy car sector, energy-saving and environment protection industry also enjoyed sound growth of 7.4 percent thanks to strengthening investment by the central government. The manufacturing sector of the information technology industry rose by 7.3 percent thanks to the growth of high-performance integrated circuit products. As this sector of the information technology industry is a main factor in the strategic new industry of manufacturing, so the effect was significant. In addition, biomedicine, new material and high-end manufacturing industries also saw positive growth.


In addition, growth of the high technology industry exceeded the average of industries in Shanghai as the total output of the sector reached 717.47 billion yuan, rising 8.7 percent year-on-year, which was 1.9 percentage points higher than the average of industries in Shanghai. Among them, the medical equipment sector had a growth of 11.2 percent as a large number of high-end medical equipment were invented thanks to innovations, which broke the monopoly of foreign companies. Electronics and telecom equipment manufacturing rose by 9.3 percent. The growth of aerospace, spacecraft and equipment increased by 8.5 percent, and computer and office equipment manufacturing rose by 7.8 percent, all of which were above the average growth of the industries in Shanghai.


In short, the sustainable growth of strategic new industries of manufacturing and high technology manufacturing is expected to be driven forcefully forward with the emergence of new technologies, new commercial patterns and new models under the background of deepening supply-side structural reforms in 2018. And it is expected that the industries will have stable development in 2018.


STV: I have two questions; the first is about the overall condition of the real estate market in Shanghai in 2017. Could you please tell us the house price trend? How will the housing market develop in 2018 amid continuous central government control over the sector? The second is: The number of permanent residents in Shanghai has dropped by 13,700, is it the first time? What are the reasons for the drop?


Tang Huihao: According to the state real estate control policy in 2017 the aim was to carry out different approaches in different cities by sticking to the guideline of “houses are to reside, not to speculate”. In this situation, the real estate market showed an overall situation of withering turnover with stable prices. The percentage point of investment increase dropped as the total investment in real estate development was 385.65 billion yuan, rising 4.0 percent year-on-year, which was 2.9 percentage points lower than 2016. The ratio of real estate development investment in the total fixed asset investment dropped by 1.7 percentage points. The turnover of the real estate market also fell. In 2017 the total sales area of new commercial houses was 16.916 million square meters, diving 37.5 percent from 2016. Of which, the sales area of residential houses was 13.4162 million square meters, down 33.6 percent from the previous year. Real estate prices were stable. The price of new commercial houses edged up 0.2 percent and the price of second-hand homes rose by 0.3 percent, which were relatively stable. In 2018 Shanghai will continue wield control over the real estate market. We expect the real estate market will remain stable in 2018.


Regarding the number of permanent residents, by the end of 2017, the number of permanent residents with hukou was 14.4565 million, or 61,500 more than a year ago. Meanwhile, the number of permanent residents without hukou was 9.7268 million, or 75,200 less than a year before. In general, the population of Shanghai remained stable as the number of permanent residents with hukou rose, while those without dropped. If I remember correctly, the number of permanent residents also fell in 2015. The drop last year was mainly due to the local industry structure adjustment. And at the same time as the economy developed the difference between different areas narrowed, which influenced the number of migrant permanent residents.


Jiefang Daily: I have two questions. The first one is: The GDP growth for the whole year in 2017 was 6.9 percent, which is slightly lower than the 7 percent of the first quarter, is there any change in the fourth quarter? What do you think of the short-term fluctuation? The second question is: Both the central government and the local government said they would set up an indicator system for high-quality economic development, including a statistical system. Apart from traditional statistics, are there any new indicators to reflect high-quality development next year? What developments on reform will there be?


Tang Huihao: In 2017 the economy in Shanghai had the characteristics of a more stable development with better structure and better quality. Both jobs and prices were stable, which revealed that economic growth was in a reasonable range and the economy more stable. In the first three quarters of 2017 the GDP grew by 7.0 percent, and for the whole year it was 6.9 percent. In another words, Q1 growth was 6.8 percent, H1 growth was 6.9 percent, and the first three-quarter growth was 7.0 percent, so economic growth has been in the range of 6.7 percent and 7.0 percent for 11 consecutive quarters; the economy has maintained stable growth.


The growth in the fourth quarter dropped slightly. However, there is absolutely no problem from the economic development point of view as the economy is always fluctuating and it’s impossible for it to grow faster and faster. The drop was mainly because industrial growth in Q4 of 2016 was rather high, which is an important reason and had a direct impact on the GDP growth.


When analyzing the overall economic development, we should put employment, consumer price and other factors into consideration in addition to GDP growth. As we mentioned just now, there were 579,000 new jobs added for the whole year, which exceeded the annual target. The CPI rose moderately at 1.7 percent for the whole year, which was 1.5 percentage points lower than 2016. Among which, the price of food, tobacco and wine rose 1.2 percent, while health-care and housing prices rose 6.6 percent and 1.7 percent, respectively, which was 2.4 percentage points and 3.4 percentage points lower than 2016.


Apart from the stable economic development, we pay close attention to the improvement in the economic structure. In 2017, the economic structure was better, mainly in the improvement of industrial structure while three needs pushed forward economic growth. The industrial and service sectors grew 5.8 percent and 7.5 percent, respectively, which showed the figure of industrial growth had improved significantly from years before. The growth in the industrial sector was the most robust since 2011 with the total output of the scaled industry rising 6.8 percent. The service sector kept increasing with total commodity sales rising 12.0 percent, which was 4.1 percentage points higher than 2016, the tonnage mileage soared 29.3 percent despite decrease in the first half. Total retail sales of consumer goods reached nearly 1.2 trillion yuan, up 8.1 percent. Fixed asset investment exceeded 720 billion yuan, rising 7.3 percent, which was 1.0 percentage point higher than 2016. Imports and exports reached 3.2 trillion yuan, rising 12.5 percent, which was 9.8 percentage points higher year-on-year. Exports rose 8.4 percent to 1.3 trillion yuan despite the drop in the first half.


In addition, the economic performance improved, which is very important. It’s mainly reflected in the rapid increase of profits for enterprises, and the stable growth of resident income and fiscal income. First, the economic performance of enterprises rose significantly. The total profit of scaled industrial enterprises in the first 11 months of the year increased 10.2 percent, which was the highest since 2011. The main operation income of scaled enterprises rose 11 percent, and the profit ratio of main operation income was 8.5 percent, which were much higher than the nation’s average. Second, the per capita disposable income of residents increased to an average of 58,988 yuan, a gain of 8.6 percent from a year ago. Third, local fiscal revenue was up 9.1 percent.


In general, the economy in Shanghai had the characteristics of a more stable development with better structure and better quality in 2017. As for the indicator system for high-quality economic development, the National Statistics Bureau is working on the indicator system and statistics system. The Shanghai statistics system will be made and reformed according to the requirement of the National Statistics Bureau with the combination of Shanghai characteristics. Once we have some initial progress we will provide them to our media friends, thank you!

Labor Daily: Here is the first question. The National Bureau of Statistics released the numbers for last year’s urban unemployment rate. What’s the number for Shanghai? Will the data be published at the same time? If so, how often? The second question: Shanghai increased 579,000 jobs last year, but over the past few years, the total number had been above 590,000. Why are there 20,000 jobs fewer?

Tang Huihao: The unemployment rate is a new survey and we are actively carrying on the task according to the bureau’s requirements. We will publish it when new data are available.

In 2017 Shanghai increased 579,000 jobs, which went beyond what had been planned and is indeed a good grade. From another perspective, the unemployment situation can be referred to apart from employment figures. By the end of last year, 220,600 locals had registered as being out of job, which is 22,000 less than the same time from the previous year, which is a good thing. Thank you.

Wenhui Daily: Shanghai GDP volume has hit 3 trillion yuan for the first time. Can you interpret the number in terms of relevant indices? From what has been released just now, the industry has developed relatively fast last year and the ratio for the third industry has edged down, taking up 69 percent of the GDP. Can you predict whether the ratio will change in 2018?

Tang Huihao: Shanghai GDP volume hitting 3 trillion yuan speaks for the city’s economic development phase and level. It is the necessary result of the sound development of Shanghai’s economy. It is also a new start. We will pursue a better quality, improve on our core competence, boost the momentum of economic progress and maintain a stable, healthy and sustainable development.

As for the ratio of the third industry, I would like to stress that it is very important to keep a proper proportion between the second and third industries. It is connected with the balanced development of the overall industry. The coordinated development of the second and third industries is important in promoting and sustaining development together and increasing the overall economy’s competence. The specific ratio number is not necessarily the higher the better. As long as it fluctuates in a reasonable range, it is normal. The added value for the third industry in 2017 is a bit smaller than that in 2016 because the second industry has obviously grown faster last year. Compared to the ratio, the inner structure and the improvement on quality are more important for the second and third industries.

I would like to add some data here. In 2017, fixed asset investment in the third industry increased 7.7 percent compared to the same period in 2016. The growth rate was 0.4 percent higher than the overall city number and took up 85.7 percent of the total, up 0.3 percent.

The inner structure for the third industry in 2017 underwent gradual changes. It developed two pillars, namely the finance industry and the wholesale and retail industry, while information transmission, software and IT service industry, transportation, warehousing and postal service industry grew in strength with regards to structure. Wholesale and retail, transportation, warehousing and postal industries grew fast. The added value for the wholesale and retail industry increased 6.7 percent, whose growth rate was 2.1 percent faster than the previous year and accounted for 21.1 percent of the third industry’s added value. Commodity sales volume rose 12 percent, returning to a double-digit growth after two years. The added value for transportation, warehousing and postal industries grew 12 percent, 5.7 percent faster than the previous year. Finance and information transmission, software and IT service industries have grown steadily with added value taking up 25.6 percent and 9 percent, respectively, in the third industry and contributing 29.3 percent and 16.1 percent, respectively, to the city’s overall growth.

In 2018 Shanghai’s third industry will continue to remain sound and stable.

China National Radio: Shanghai’s foreign trade exports have shown double-digit growth, which is different from the previous low tide. Why? Can you predict the trend for this year?

Tang Huihao: In 2017, Shanghai’s commodity import and export trade grew rapidly with 3.22 trillion yuan in total volume, up 12.5 percent and 9.8 percent faster than the previous year. Imports reached 1.91 trillion yuan, up 15.4 percent, and exports hit 1.31 trillion yuan, up 8.4 percent. In the past year, the import and export trade had three features. As for the entity of the foreign trade, foreign investors remained the main body and realized 2.15 trillion yuan in import and export value, up 13.6 percent and taking up 66.6 percent of the city number; the import and export value for private enterprises grew 19.4 percent, making it the fastest growing sector, accounting for 18.4 percent of the city’s value. As for trade type, common imports and exports increased 15.6 percent and accounting for 50.7 percent of the overall number; processing trade grew 9.1 percent, taking up 23.3 percent of the overall number. In terms of trade partners, Shanghai’s import and export trade against the EU, the US and ASEAN grew 19.2 percent, 9.7 percent and 20.5 percent, respectively.

Shanghai’s commodity import and export trade grew relatively fast in 2017 for the following three reasons. The world economy is recovering, pulling up the city’s foreign trade. Prices of bulk commodities rose. Both the amount and the price for iron ore and coal rose, which impacted the import value. Second, the growth of the domestic economy also boosted demand for imports. In 2017 the Chinese economy was steady and sound and the trend is likely to continue. Third, the upgrade for the export commodity structure boosted growth. In the past year, hi-tech commodity export volume hit 56.97 billion yuan, up 9.2 percent and accounting for 43.4 percent of Shanghai’s export value. The products that were exported the most were automatic data process equipment and components and integrated circuits.

In 2018 the world economy is going to recover further and the Chinese economy will remain steady while growing better, too. Shanghai’s economy will grow steadily. Meanwhile the bonus from reforms and opening up as well as innovative development will continue to show. The exploration of the free trade port and the holding of China’s first international import fair will also push forward the city’s economy to the next level and yield benefits for the import and export trade. But we will need to see the uncertain factors in the international environment, too. Generally Shanghai’s import and export trade will continue to grow in 2018.

CBN Daily: I have two questions. Seeing from the economic performance all year round, where can we see Shanghai’s innovation-driven development and the effect of economic transformation? How is the development of the new economy and new momentum?

Tang Huihao: In 2017, the above can be seen in three perspectives. First, the innovative economy momentum has been further boosted. Work to construct the Zhangjiang National Science Center is in full swing with the progress to build Shanghai into a science and innovation center. The overall innovation reform is accelerating. Work has kicked off to build six generic technology research and development platforms, including SITRI. It is estimated that R&D investment this year will reach 11.4 billion yuan, rising 8.6 percent from last year. The investment intensity is 3.75 percent, up 0.03 percentage points from last year.

Second, new economy growing points continue to expand. In the industry, new technology, products and smart manufacturing are ensuring that the technology-intensive industry is driven by innovation, with transformation being speeded up. As for industrial output, industrial robots have seen 89.7 percent growth; SUVs are up 79.6 percent; and new industrial products like 3D printing equipment, and lithium battery also grew rapidly. In the service industry, software and IT service industry as an industry with large volume has seen double-digit growth in recent years, faster than the sales volume increase for social consumer goods, taking up 12.2 percent of the total volume.

Third, structural reforms on the supply side are showing results. In 2017 Shanghai insisted on the reforms, cut down inefficient industrial capacity, boosted the steel and petrochemical industry output value through price mechanism, promoted industry upgrade and optimized the product structure to gain rapid profit growth.

I would like to list some data on the new economy and new momentum, too. In 2017, Shanghai’s strategic emerging manufacturing industry gained 5.7 percent more of total output value, taking up 30.8 percent of the city’s total industrial value, a 4.1-percentage-point gain from last year. New consumption in commerce also stood out as the catering service and retail industries surged. In 2017, online purchases in the e-commerce trade increased 31 percent, compared to the same period of the previous year. The number of new private enterprises is growing steadily. By the end of last November, the total number of private enterprises had reached 1.69 million, up 8.4 percent year-on-year, with registered capital totaling 11.95 trillion yuan, a rise of 20.2 percent. Thank you.