1.Communications and informationization
1.1 By Sea
Shanghai Port is the fourth largest container port in the world with a throughput accounting for one sixth of the national total and a total amount of import/export trade accounting for one fourth of the national total. Shanghai Port has established shipment and trade contacts with more than 600 shipping companies at more than 500 ports in more than 200 countries and regions. In 2002, the throughput of international containers at Shanghai Port reached 8.61 million TEU, ranking the fourth in the world following Hong Kong, Singapore and Pusan.
1.2? Inland Transport
Shanghai has an inland transport network open to all directions. Starting from Shanghai Railway Station, you can reach all railway stations in China. In the aspect of highway, Shanghai plans to complete the express highway for 650km by 2005. It takes only 15 minutes from any major industrial areas, transport hubs and satellite cities to the adjacent express highway and 30 minutes to the city proper. The total mileage of express highways in Shanghai has reached 238km and a complicated transport network linking Shanghai, Zhejiang, Jiangsu and even Yangtze River Delta is taking its form. Nowadays, starting from Shanghai, any city within the scope of Yangtze River Delta can be reached within a matter of 4 hours. In the central urban area, a cubic transport network system characterized by rail transport facilities, flyover highways, the 3 ′ 3 arteries and embodied by cross-river projects is forming. The single line magnetically levitated railway has been put into trial operation in Shanghai.
1.3? By Air
Shanghai is the only city in mainland China, which has 2 large-scale international airports. In 2002, the cargo throughput ranked the first in the country and passenger throughput the second. In the domestic airlines, Shanghai has airlines to various provinces and autonomous regions (excluding Taiwan). In the international airlines, Shanghai has established air contacts with 59 cities in the world with 31 international airlines as cooperative partners.
1.4? Deep-Water Port
In order to meet the ever-increasing demand of the container throughput in Shanghai, Shanghai has initiated the project of Daxiaoyangshan Deep-Water Port, which is the key project for China in the construction of deep-water ports in Yangtze River Watershed and Delta areas. The positioning of the port is to become a hub port of Northeast Asia, with a water depth of 15m, more than 50 berths for large container vessels and a capacity to 25 million TEU. In the meantime, as an affiliated project to the deep-water port, a port city covering 95 square km and residents of 300,000 will be constructed. Upon completion, the port city will become “the Gateway of Shanghai” and a coastal eco city representing the development direction of the 21st century.
1.5? Hub Airport
Shanghai will construct an international airway hub port complex with Pudong International Airport the main body and Hongqiao Airport as the supplement. At present, Pudong International Airport has a throughput capacity of 20 million passengers and 0.75 million tons of cargo. It is planned that by 2005 the status of Asian and Pacific airway hub port should be recognized. By 2010, 4 4-B class runways, 200 parking places with the a total area of 40 square km, an annual throughput capacity of 80 million passengers and 5 million tons of cargo will be constructed. (An international airway hub port in a common sense should have more than 2 runways, a passenger throughput of 30 million and a cargo throughput of 1 million tons. Pudong International Airport will by far exceed such a standard.)
1.6? Informationalization
In the aspect of informationalization construction, Shanghai takes the leading position in China. According to the plan, by 2005, the informationalization development will reach the average level of the central cities of the developed countries and the basic framework of a “digitalized city” will be constructed.
The major and affiliated projects for Shanghai’s information port include integrated information pipeline project, wide-band network construction project, 2 key application projects and a bunch of affiliated application projects etc. By 2010, the following targets will be reached:
1.The international outlet wide-bank linking the internet will be more than 1,000M;
2.The optical fiber coverage of buildings and living quarters will be more than 95%;
3.The optical fiber coverage of families will reach 50%;
4.The narrow access capability will reach 60,000 lines, reaching the capacity of 1 million users;
5.The local interactive net wide band will reach more than 100M;
6.The popularity rate of family telephones will reach 85%, the popularity rate of mobile phones 23.8% and coverage rate of family cable TV 85.4%.
2. Government Work
The Municipal Government of Shanghai is actively transforming its function, supporting the foreign investment enterprises from multi position through multi approaches, striving to improve the transparency and efficiency of work and do more for the foreign investors by means of informationalized approaches. Shanghai Foreign Investment Promotion Center – a specialized investment promotion agency pioneering in China provides the foreign investors with all-round services.
- Electronic Administration
Shanghai is pursuing the process of electronic administration of the government in an overall manner, shortening the time for examination and approval and improving the efficiency. The investors can carry out search, consultation and complaint through the gateway website of Shanghai Municipal Government – “Shanghai of China (www.shanghai.gov.cn). In addition, Shanghai is dedicated to the reform of the administrative system for examination and approval in order to shorten the time for examination and approval from 5 weeks to 3 weeks.
- Uniformed Improvement of Customs Clearance
With respect to the issue of the efficiency of customs clearance which is concerned by the foreign investment enterprises, Shanghai is carrying out the project of uniformed improvement of customs clearance, which has significantly improved the efficiency of customs clearance of Shanghai. Along with the reform and opening-up, the cargo import and export in Shanghai have been increasing rapidly and the work efficiency of the port has become one of the important factors in the assessment of the investment environment of trade. For this reason, in June 2000, Shanghai Municipal Government started the project to improve the work efficiency of the port, which is so called “uniformed improvement of customs clearance”. Through the implementation of the project, the time for customs clearance is shortened from 120 hours to 24 hours and time for airway customs clearance from 72 hours to 12 hours. In Songjiang Export Processing Zone, it takes only 4 hours for airway cargo to clear the customs.
Shanghai is not only a traditional gateway for China to face the world. After joining WTO, Shanghai will even become the first stop for foreign investors to land in China. In the aspect of market opening-up, Shanghai has been taking the lead in the country. Particularly after China joined WTO, The service and trade industry of Shanghai has created many Number Ones. Shanghai is also among the cities opening up to the outside world in the fields of retail, banking, insurance and telecommunication.
Shanghai is actively integrating the fragmented market, enhance the level of marketalization, vigorously improve the legal environment and protect the intellectual property rights, which has enabled Shanghai to become the city with a most orderly market in China.
In 2002, Shanghai formulated the Opinions on Merger and Acquisition of State-Owned Assets by Foreign Capitals, encouraging the foreign capitals to carry out merger and acquisition in 7 fields. In 2002, the growth rate of non-publicly-owned economy was 23.9% - 18% more than that of the publicly-owned economy, accounting for 32% of GDP. More than 20 departments of Shanghai organized the “Joint Conference on Intellectual Property Right”, which has formulated and revised 6 laws and decrees on the intellectual property right. In 2001, the volume of patent authorization increased by 33% and volume of trade market application increased by 19%. There are 3.78 lawyers among every 10,000 people, 3.5 times of the average in China. There are more than 50 foreign lawyer offices, accounting for 1/3 of the total. Shanghai has 160 industrial associations of the municipal level, which have become important agencies for the decision-making of the government and self-discipline of the industries.
- Social Honesty and Credibility
Shanghai regards the social system of honesty and credibility as a basic task. Up till now, the largest corporate and individual inquiry system in China has been established and will be further improved and deepened step by step. This is the largest and earliest inquiry system connecting most of the agencies. The credibility files of 2.93 million persons have been established for the individual credibility system and for the corporate credibility system, 480,000 companies have been input in the databank, covering all companies which have economic activities in Shanghai. For the next step, Shanghai Municipal Government plans to further revise the laws and decrees affiliated to the inquiry system, make systematic arrangement on the use of the system of social honesty and credibility, structure the credibility management of companies, further perfect the information collection network and form the business chains of credibility inquiry.
- System of Financial Market
As the financial center of China, Shanghai has the most perfect system of financial market in mainland China to provide the foreign investment with financing facilities.
In 2002, Shanghai Municipal Government established an office of financial services, strengthening the function of financial services of the local government. The financial market of Shanghai can be further divided into the market of securities, inter-bank lending, inter-bank bond, futures, foreign exchange and gold etc. in which there are 730 companies listed in Shanghai Securities Exchange issuing 775 stocks (in which there are 54 B stocks, raising nearly USD 3 billion, attracting large numbers of overseas investors and providing the foreign investors with a new approach for investment in China). The transaction amount of stocks of Shanghai market in 2002 accounted for 60% of the national total and the total market value of the stocks reached RMB 2.8 trillion. In 2002, Shanghai Gold Exchange formally opened to business, marking that the completion of the construction of various major financial products in China, which also makes Shanghai become the only one area in China with comparatively perfect financial market system. Shanghai has basically established its position as the domestic financial center as a good image for the opening-up of the financial industry.
- Financial Institutes with Foreign Investment
Along with the trend that more and more financial institutes with foreign investment speed up embarking on Shanghai, the financial market of Shanghai will be more perfect and active with its financial services heading for the international standard.
There are more than 3,300 financial institutes with foreign investment in Shanghai, among which there are nearly 70 operative ones, 54 foreign banks and 15 foreign insurance companies. There are 4 foreign banks establish their China head-offices in Shanghai, including CITIBANK, HSBC, Standard Chartered Bank, Bank of Overseas Chinese. The volume of deposit and loan business of the foreign banks in Shanghai has accounted for half of the national total and the rate of deposit and loan in RMB exceeded 80%. 30 foreign banks have obtained the licenses for the operation in RMB in Shanghai and 23 have the licenses to handle business in foreign exchange in an overall manner. It is doubtless that Shanghai is the financial center of China and is rapid developing towards an international financial center.
- International Convention and Exhibition
The booming of the convention and exhibition industry in Shanghai has significantly promoted the development of the international market environment, demonstrating that the international status of Shanghai is rapidly enhancing.
The area of convention and exhibition in Shanghai is rapidly growing at a rate of 30%. Many world-class exhibitions settle down in Shanghai, such as Fortune Forum, APEC, Shanghai 5, ADB’s Annual Meeting, 32nd Conference of International Chamber of Commerce etc. Shanghai International Mold Fair has been listed into the exhibition directory of UFI. 2010 Shanghai Expo has created many "tops" in the world expo. It is the first world expo to be held in China and will become the largest one in land occupation and attraction of visitors. Shanghai will invest more than USD 3 billion in this event.
Shanghai not only has various perfect and sufficient colleges, middle schools, primary schools and vocational schools necessary for the domestic education, but also establishes schools for children of foreigners, overseas Chinese from Hong Kong, Macao and Taiwan living in Shanghai. According to statistics of 2001, there are 25 international schools in Shanghai, including kindergartens, primary schools, junior middle schools and senior middles.
There are 18 districts, 1 county and 156 towns in Shanghai with a resident population of 13.34 million and a permanent population of 16 million. By the end of 2001, there were 7.5226 million employees in Shanghai, in which 1.8411 million work in state-owned units, accounting for 24.5% of the total; 2.6714 million work in collectively-owned units, accounting for 35.5% of the total and 3.0101 million work in foreign investment companies, privately owned companies and other economic entities, accounting for 40% of the total.
Shanghai takes a leading position in talent quality in China with high production of unit labor cost. Shanghai not only has a voluminous talent reserve, but is also a rendezvous attracting the talents from both home and abroad. Shanghai has 50 common colleges with 330,000 students in campus. By the end of 2001, there were 696,800 technicians of various specializations, accounting for 10% of the total number of employees and various institutes for scientific research and technical development reached more than 1,000.
Shanghai adopts pragmatic measures to absorb the talents in need, such as encouraging the talents to flow to Shanghai “flexibly”, implement the system of resident certificate and issue “Shanghai Green Card”. Up till now, Shanghai has introduced 32,000 overseas Chinese students, accounting for 20% of the national total. Experts from overseas, Hong Kong, Macao and Taiwan permanently residing in Shanghai are nearly 50,000, accounting for approximately 40% of the national total. In addition, Shanghai has released 10 important measures to absorb hi-tech talents and will publish the tender and bid system for the internationalized talents.
Shanghai has approximately 4,600 various medical institutes, in which there are more than 460 comprehensive hospitals, 26 disease prevention and control centers and 10 healthcare institutes for women and children. There are altogether more than 100,000 professional medical technicians, among whom there are about 50,000 doctors. There are more than 70,000 hospital sick beds. The community healthcare service network is under continuous improvement, with more than 60 standardized community healthcare service centers. Among the 18 foreign investment hospitals and more than 60 foreign investment clinics approved by the Chinese Government, 25 are located in Shanghai.
Up till now, Shanghai has 2 underground railway lines and 1 light rail line as well as the first magnetically levitated railway line. It is planned that by 2005, the total mileage of the rail transport in Shanghai will be increased from the present 65 km to 233 km and to 15 lines for a mileage of 400 km of 15 lines.
At present, the number of foreign working and living in Shanghai is far more than those in other cities of China. According to statistics, in 2002, there were about 100,000 foreigners living in Shanghai and about 250,000 Taiwanese living in Shanghai, among whom there were 34,735 employed in Shanghai coming from 126 countries respectively.
There are 3 reasons for such many foreigners chose to live in Shanghai. One is the cheap housing price. Two is the convenient life and perfect affiliated facilities. What is more important, they have an active prospect on the economic development of Shanghai.
Shanghai is a city with long history. In 2001, there were 16 places listed as the key national historical relics protection units. 110 places as the municipal historical relics protection units, 21 places as the memorial sites and 15 places as protective sites. Up till now, Shanghai still keeps some places with historical significance and rich characteristics of the Tang, Song, Yuan, Ming and Qing Dynasties. Among them, there is Longhua Temple with a history of more than 1,000 years, Jingan Temples constructed during the period of warring states, Yufo Temple famous both at home and abroad, Yuyuan Garden with the beauty of south China, Confucius Temple in Jiading and Fangta Tower, Zuibaichi Pool in Songjiang etc.
Entering the 90s, Shanghai constructed a batch of functional buildings famous all over the world, which formed a attractive scenery line and also became the tourism sceneries in Shanghai, such as the People Square – so-called "urban green lung”, Eastern Pearl Broadcasting & TV Tower with 10 number ones in the world, number one skyscraper in China – Jinmao Tower, Walking Street of Nanjing Road, Shanghai Museum, Shanghai Theater, Shanghai Urban Planning & Exhibition Hall etc.
In Shanghai, Shanghai Theater, Shanghai Movie City, Shanghai Circus City, Shanghai Science & Technology Hall etc.
In Shanghai, operas, concert, piano playing, magic and acrobatics etc. staged at Shanghai Theater, Shanghai Movie City, Shanghai Circus City, Shanghai Science & Technology Hall etc. are in performance all year round. On holidays, there are also activities such as fireworks and parades etc. There are about 20 golf courts in Shanghai and surrounding areas and hundreds of sports centers. In addition, Shanghai also has some places famous for bars, such as Hengshan Road, New World etc. rich in Shanghai's tradition and modern characteristics frequented by foreign friends.
Early in the beginning of the last century, Shanghai was the largest industrial city in China and the financial center of the Far East. In the 90s of the 20th century, Shanghai tightly grasped the development opportunity of historical significance to open and develop Pudong, deepen the reform, expand the opening-up, actively engaged in exploration, strive to work, so that the continuous, rapid and healthy growth of the national economy has been realized and stability as well as the capability to resist volatility of the economic operation greatly enhanced. By 2002, the total volume of GDP in Shanghai broke through the mark of USD 65 billion with a per capita GDP closing in on USD 5,000. It is estimated that by 2007, the per capita GDP of Shanghai will reach USD 7,500. While the growth of economy is kept at a high speed, Shanghai also keeps a stable step, with its unemployment rate being kept at 3% - 5% and inflation rate at 2% - 4%.
In 2002, the investment in the infrastructures of Shanghai reached RMB58.3 billion, accounting for 27% of the investment in fixed assets of the city, with an annual average increase rate of 11% for the past 5 years. The fields of the infrastructure investment were mainly concentrated at urban construction, transport, postal service, telecommunication, and public facilities.
Shanghai has a solid industrial base. It is not only a traditional industrialized city. For recent years, the third industry has been developing rapidly with an annual increase rate of nearly 12%, which accounted for 51% of GDP in 2002. Compared with other major cities with foreign investment in China, the increase value of the industry and third industry of Shanghai is by far the leader. In the industry, 6 key industries (electronic information, auto, petrochemical and fine chemical, bio medicine, complete equipment) account for 58% of the total industrial value. Four major service industries in the third industry (finance and insurance, real estate, transport/post/communication, wholesale and retail) accounted for 62%, in which the financial industry has been taking the first place for a long time, accounting for 21%.
Shanghai has an obvious industrial advantage and complete industries. For the future 5 years, Shanghai will insist on the development principle of “focusing on both the second and third industry” to development the pillar industries of information, finance, trade, auto, real estate, and complete equipment; actively nurture 4 newly emerging industries of bio medicine, modern logistics, new materials, environmental protection; continue to develop the basic industries of quality steel, petrochemical products and fine chemical. It is estimated that by 2005, the increase value of the 6 pillar industries will reach 60% of the GDP, in which the information industry will be most rapidly growing industry with an annual average increase of 25%. The financial industry will account for 18% of GDP and thereby become the core industry. The trade industry will encourage the chain operation and informationalized management. 2010 World Expo will bring about quantities of investment opportunity to the manufacturing industry of complete equipment.
Surrounding the upgrading of the industry structure in Shanghai, Shanghai will put forward the construction of the east, west, south and north hi-tech industrial zones. The northern part will become a base for quality steel, the eastern part will become the information industrial base, the western part will become a complex auto manufacturing base and the southern part will be the chemical production base. There exist quantities of investment opportunities in these bases. For example, by 2005, the total investment of the eastern information industrial base will reach USD 160 billion and that of the southern chemical production base USD 100 billion.
- Foreign Direct Investment (FDI)
5.3.1?????? General Situation of FDI
In 1991, the FDI value in China was only 20% of that of USA, but in 2002, China surpassed USA, becoming the most attractive country to the world capital. In the past 10 years, FDI in China has been rapidly increasing at a rate of 25.4%, while the increase in USA is only 7.2%. China’s economy has been continuously increasing. The investment environment is continuously perfected. Competitive labor resources and undertakings for China to enter WTO etc. are the main reason for such a rapid FDI development in China.
In the past 10 years, the FDI scale in Shanghai has been rapidly increasing, 10% higher than the national total, taking the first place in China for years. By 2002, FDI in Shanghai account for 19.3% of the social fixed assets investment.
5.3.2?????? Industrial Structure
From the perspective of industrial structure, by 2002, the foreign capital absorption of the third industry in Shanghai accounts for 46.5%, while the national rate is 32.7%, in which the real estate industry accounts for 50% of the foreign capital absorption in the third industry, while the post, telecommunication, finance, insurance, cultural media etc. absorbs less foreign capital because of the level of market opening. Along with the gradual realization of the undertakings for China to enter WTO, the foreign investment in financial industry is expected to develop more rapidly. More than 95% of the investment in the second industry is concentrated in the manufacturing industry, particularly the labor-intensive and processing or assembly companies, accounting for about 60% of the total number of projects.
5.3.3?????? Investment Approach
From the perspective of investment approach, in 1991, the wholly owned foreign companies accounted for only 24%, but for recent years, the rate of wholly owned foreign companies has been rapidly increasing, accounting for 70% by 2002.
5.3.4?????? Investment Sources
From the perspective of investment, by the end of 2002, the investment from Southeast Asia accounts for 50% of the total investment and the balance main comes from Latin America, Europe and North America, accounting for 19%, 15% and 13% respectively. From the perspective of investment countries and regions, Hong Kong, Japan and USA take the first 3 positions. Up till now, there are investment from 103 countries and regions in Shanghai.
Investment from different countries and regions in Shanghai has different characteristics:
1. Different project scale. EU has the largest investment in individual projects of Shanghai, reaching USD 7.08 in 2002, while Taiwan has the smallest investment in individual projects of Shanghai, only USD 1.1 million;
2. Different industrial advantage. Hong Kong mainly invests in real estate, garment, textiles and trade etc. Japan mainly invests in auto, semi-conductor, precision instrument etc. USA mainly invests in auto, bio medicine, petrochemical, finance, retail etc.
3. Different in time of mass entering. Because of the reasons of location and culture etc., the Asian countries and regions enter Shanghai earlier than the others, while most of the large-scale projects of Europe and America enter Shanghai after 1996.
5.3.5?????? Investment Return
The mainly economic indexes of the foreign investment companies in Shanghai in investment return, productivity and per capita profit etc. are more than 30% than the local industries companies. The number of the industry companies with foreign investment is more than 50% of the total industrial companies in Shanghai, which have become the important component parts of Shanghai’s economy.
5.3.6?????? Trend for Shanghai to Use Foreign Investment
Along with the China’s entering WTO, the attraction of Shanghai to foreign capital becomes stronger and stronger. New characteristics will be seen in future investment as follows:
1. In industrial structure, Shanghai will focus on the development of hi-tech industry and export-oriented economy. The share of the service and trade fields will continue to expand, while encouraging the foreign investors to invest in the 6 pillar industries;
2. In investment approach, Shanghai welcomes foreign capital to invest and hold share within the permitted scope, while encouraging the foreign investors to invest through M&A, equity assignment in capital market etc. to participate in the reform and restructuring of state-owned companies;
3. In investment strategy, encourage the foreign investors to establish regional head-offices, global R&D centers and cross-boarder purchase centers, hoping that the foreign investment in Shanghai becomes more systematic, with the significance of global strategy.
5.3.7?????? Economic Development Zones of Various Levels
Shanghai has planned and completed the construction of various specialized economic development zones, providing foreign investors with suitable environment based on the industrial characteristics.
The development zones in Shanghai of various levels have their own characteristics and preferential policies, in which Pudong New Area is the largest development zone in Shanghai. There are financial and trade development zones such as Lujiazui Financial & Trade Zone, Hongqiao Economic & Technical Development Zone etc.; export-oriented industrial zones such as Songjiang Export Processing Zone, Jinqiao Export Processing Zone etc. In addition, there are 9 major industrial zones in the suburbs of Shanghai, namely Jiading Industrial Zone, Baoshan Urban Industrial Zone, Chongming Industrial Zone, Qingpu Industrial Zone, Xinzhuang Industrial Zone, Songjiang Industrial Zone, Kangqiao Industrial Zone, Shanghai Comprehensive Industrial Development Zone, Jinshanzui Industrail Zone. Up till now, many renowned companies have entered these development zones.
Since the 90s of the 20th century, the urban construction of Shanghai has been rapidly developing focusing on the function and hub infrastructure. The accumulative investment in the construction of urban infrastructure has exceeded RMB360 billion, with an average annual increase of 30.7%, accounting for 23.1% of the investment in fixed assets of the same period. Because of the highly intensified investment in urban infrastructure, large-scale promotion and high quality construction, the investment environment of Shanghai has been significantly improved. The urban layout tends to be more reasonable and great changes have been seen in the appearance of the city.
A cubic transport network system with rail transport, fly-over roads, arteries, cross-river projects as the body has been formed in the city proper. The single line magnetically levitated railway has been put into trial operation in Shanghai. Shanghai is focusing on the strengthening of the environmental protection and construction. The first phase of Suzhou River treatment project has been completed. The water environment of the city has been continuously improving. The quality of the atmosphere environment is improving steadily. The green land construction is developing rapidly with green land coverage of 30%. The quality of urban bio environment has been evidently improved. A batch of municipal public utility projects of power, water supply, drainage, flood-fighting, gas, telecommunication etc. will be completed one after another. |
