Shanghai targets overseas investment in 5 key sectors

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Last updated at: (Beijing Time) Saturday, February 07, 2004

Shanghai targets overseas investment in 5 key sectors

Overseas firms will be especially welcome to Shanghai this year to either take over or merge with local State-owned firms, officials and experts said.

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Overseas firms will be especially welcome to Shanghai this year to either take over or merge with local State-owned firms, officials and experts said.

The city government wants to attract overseas capital to five sectors this year - micro-electronics, chemicals, fine steel, shipbuilding and equipment manufacturing.

"These manufacturing sectors will be the focus for attracting overseas investment this year," said Liu Jinping, deputy director of Shanghai Foreign Investment Commission, who expected the city would attract US$6.5 billion of overseas investment this year, an increase of almost 20 per cent compared to last year.

Investments from the United States, the European Union, Japan, South Korea, Singapore, Taiwan Province and the Hong Kong Special Administrative Region are especially welcome to Shanghai, explained Liu.

These five manufacturing sectors, plus the service industry, are regarded as the city's backbone industries, according to Shanghai Municipal Development and Reform Commission.

Service industry output accounted for around half of the city's gross domestic product last year, but more than 60 per cent of foreign investment went to the manufacturing sector.

"The manufacturing and service industries remain equally important for Shanghai in terms of the introduction of foreign investment," said Lu Xiongwen, a professor of the Management School at Shanghai's Fudan University.

Shanghai's strong manufacturing industries remain attractive to foreign investment as they are much more technologically based and capital-intensive than in neighbouring regions, Lu said.

"There is no need for Shanghai to hurriedly adjust its industrial structure to focus on the service industry," said Hua Min, a professor of global economics at Fudan University.

Shanghai's growing manufacturing sector helps the city maintain its economic growth and ease employment pressure, Hua said.

But the city also needs to further upgrade its manufacturing sector by introducing more multinationals' research and development centres, as well as encouraging foreign companies to set up their service functions in the city, said Hua.

Shanghai has formed four suburban manufacturing bases microelectronics in the east, automobiles in the west, petrochemicals in the south and fine steel in the north.

And the city is accelerating the development of its equipment manufacturing industry in Nanhui District in the southeastern suburbs and shipbuilding industry on Changxing Island.

State-owned enterprises, such as Baosteel, Shanghai Petrochemical Co Ltd and Shanghai Automotive Industry Corp (SAIC), dominate these manufacturing bases.

The announcement of the new policy means that foreign businesses are expected to step up their investment in those State-owned enterprises this year.

According to the Guidelines of Merger and Acquisition of State-owned Enterprises by Foreign Capital, released by the city government last August, foreign capital is welcomed to play an active role in restructuring the city's massive State-owned sector.

On January 10, Shanghai Electric (Group) Corp (SEC), one of the country's major industrial players, put its core assets of about 6.5 billion yuan (US$785.9 million) on the local property exchange in a bid to win both domestic and international investments.

The move was widely seen by local experts as one which would spark a further re-organization of the city's SOEs.

Source: China Daily

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