Reforms pay off as growth gathers pace

Updated 2017-11-02 10:02:56 Shanghai Daily
Youngsters visit Shanghai Automobile Museum to learn about new energy in this file photo. The emerging industry is playing an increasingly bigger role in Shanghai’s growth process. New energy automobile sector posted a year-on-year 27.9 percent gain in the first three quarters of 2017. (Dong Jun)

Youngsters visit Shanghai Automobile Museum to learn about new energy in this file photo. The emerging industry is playing an increasingly bigger role in Shanghai's growth process. New energy automobile sector posted a year-on-year 27.9 percent gain in the first three quarters of 2017. (Dong Jun)

Led by a surge in its industrial production, Shanghai's gross domestic product posted a 7-percent growth in the first three quarters of 2017 — a pace last seen in 2015, when economy was boosted by stocks and property market.

The growth this year was largely the result of Shanghai's efforts to develop the free trade zone and the center for technological innovation.

Also, Shanghai persisted in improving quality and efficiency with innovation and put the supply side reforms into effect as well.

The manufacturing industry picked up in the 9-month period after a period of slump, while the industrial and services industries are developing in a more balanced way.

Value-added industrial output in Shanghai increased by 8.1 percent in the first three quarters from the same period last year. The city's services output rose 6.6 percent, contributing 69 percent of the local GDP.

The main business income of industrial enterprises above designated scale in Shanghai rose by 12.4 percent from January to August from the same period of last year, with the total profit rising by 15.7 percent.

"The rapid development of industrial companies can be attributed to four reasons. High industrial concentration came with high profits; structural optimization helped to make the demand more resilient; the present distribution patterns are beneficial to companies that help lower the cost and raise the profit rate; capacity utilization rate rose which helped in speeding up the capital turnover," said Xie Yaxuan, chief macro-economic analyst with China Merchants Securities.

The number of industrial companies declined while the industrial concentration rose due to supply side reforms, helping to turnaround their businesses after years in red.

Demand improved as consumption was steady while external demand margin also rose, offsetting the depressed investment. The producer price index and the Purchase Management Index both rose in the first three quarters, according to the data from Wind Information, a financial information provider.

Indicators showed that the cost rate of industrial companies kept declining while profit rate continued to rise due to policies and measures including tax abatement, encouraging innovation and entrepreneurship, and emphasizing the development of real economy.

The increase of capacity utilization raised the velocity of turnover of capital, which can also help improve the companies' profits, the China Merchants Securities' report noted.

Meanwhile, the emerging industry is also playing an increasingly bigger role in the growth process. New energy automobile sector posted a year-on-year 27.9 percent gain, the information technology of the new generation increased by 12.3 percent and the biological medicals was up 9.2 percent.

The large-scale scientific facilities in the Zhangjiang High Tech Park in Pudong serve as a cradle for major scientific and technological development. Basic scientific facilities such as the Shanghai Synchrotron Radiation Facility and the National Center for Protein Science Shanghai will be developed further even as more research centers come up in the near future.

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