A series of articles on conscientiously implementing the spirit of the Central Economic Working Conference will be published in installments. This is the first one written by the Shanghai municipal Party committee and the Shanghai people's government. It runs in part as follows:

The recent Central Economic Working Conference is an important meeting designed to implement the spirit of the Fourth Plenary Session of the 15th CPC Central Committee. The conference calls for taking further promotion of the readjustment of the national economic structure as one of the breakthroughs in maintaining the sustained, rapid and healthy development of China's economy. The Shanghai municipal Party committee and the municipal government have confirmed that this strategic decision of the central authorities is very correct.

The good development momentum maintained by Shanghai's economy is benefited mainly from the readjustment and optimization of the industrial structure. Since the beginning of the 1990s, the Shanghai municipal Party committee has commanded the whole situation, seized opportunities and made unremitting efforts to push forward the readjustment of the industrial structure. These efforts have improved the overall quality of the national economy and given a vigorous impetus to the maintenance of two-digit growth of Shanghai's economy for seven straight years. Since the beginning of this year, despite the pressure brought about by insufficient demand, Shanghai has unswervingly implemented the central authorities' correct decision on expanding domestic demand, as a result, the economic growth momentum is obviously better than what was anticipated early last year. By the end of this October, GDP saw a 9.9 percent growth over last year's same period. The added value of industry went up by 9.4 percent over the same period last year, with the growth rate standing at 2 percentage points over the same period last year; enterprise efficiency turned for the better, the comprehensive index of industrial economic returns increased by almost 7 percentage points over the same period last year. Between January and October, export volume amounted to US$15 billion, a 19 percent increase, the municipality's total retail sales of consumer goods rose by 8.1 percent, the strong consumption growth momentum in the service sectors, such as housing, education and communication, was playing an increasingly noticeable role in boosting economic growth. Aggregate investment volume maintained a fairly big scale and the investment structure was being constantly optimized.

The large-scale readjustment made to Shanghai's industrial structure has led to the formation of a new pattern marking the common impetus given by the secondary and tertiary industries to economic growth and to enhancement of the stability of economic operation. The large-scale readjustment made in industrial distribution is gradually forming a new pattern featuring the economic development in big cities which embodies prosperity in the urban districts and the level of strength in the suburbs, it has expedited enhancement of the city's comprehensive service functions. Major readjustment made to industrial organization has formed a new pattern for the common development of economies of different types of ownership and promoted the strategic reorganization of the State-owned economy and the establishment of a basic frame for a modern enterprise system.

In the early 1990s, the Shanghai municipal Party committee and the municipal government defined the development principle for giving priority development to the tertiary industry, active readjustment of the secondary industry and steady enhancement of the primary industry. For many years, no matter what changes have taken place in the internal and external economic environments, Shanghai has unswervingly boosted the readjustment of the industrial structure, brought about the change from adaptable readjustment to strategic readjustment and maintained the continuity, stability and innovativeness of the readjustment of the industrial structure.

First is giving priority development to the tertiary industry and constantly enhancing the city's comprehensive service functions. The proportion of the tertiary industry to GDP has risen from 31 percent in 1990 to about 50 percent this year. Finance, shipping, information service and other industries, which have emerged as a new force, have become a driving force for the rapid development of Shanghai's economy. In the past two years, the real estate sector has begun to step on to the path of sound development, and housing consumption has become a new area of economic growth. Between January and October this year, the city has newly added 11 billion yuan of public accumulation fund loans and commercial loans for personal housing. The area of commodity housing sold has reached 8.6 million square meters, up 60 percent over the same period last year; the secondary market for housing property has begun to become brisk, the number of purchased public houses transacted on the market and houses exchanged at different prices have both exceeded 10,000 households. The continued expansion in housing consumption has also boosted the synchronous development of building materials, household electrical appliances and furniture industries.

Second is actively readjusting the secondary industry and constantly expanding pillar industries.

Shanghai, being an old industrial base, has a complete array of industrial departments and a solid foundation, but is faced with the outstanding problems of having "a large population, heavy debts and weighty responsibility". Since the Party's 15th National Congress, the central authorities have promptly adopted a series of major policies and measures to push forward the reform of State-owned enterprises (SOEs) and expand domestic demands, which have played a notable role in freeing Shanghai's SOEs from difficulties and optimizing readjusting the industrial structure. Firmly seizing the opportunity offered by the government's policies for seven times of interest reduction, merger and bankruptcy of enterprises, the raise of export refunding, increase of technological renovation discount loans, the change of creditor's right into stock right and the direct collection of funds through the securities market, Shanghai's industrial department is building up new competitive superiority.

Making active, rational and effective use of foreign capital is a major move taken by Shanghai to promote industrial upgrading, and accelerate the construction of industrial new highland. By this September, Shanghai had actually made direct utilization of foreign capital totaling US$27 billion, the number of foreign-invested enterprises had been close to 20,000, with over half of the world's top 500 firms invested in Shanghai. A batch of large Sino-foreign joint ventures of industry had gone into operation one after another, forming new advantages in the automobile, electronic communication, iron and steel and petrochemical fields. The realization of the second innovation of pillar industries made through the introduction, digestion and absorption of advanced technologies had boosted the optimization and upgrading of pillar industries and the renewal and renovation of traditional industries.

Third is accelerating the cultivation and development of high and new technological industries and gradually promoting industrial upgrading. Shanghai has regarded the development of high and new technological industry as the strategic orientation for the readjustment of the industrial structure. First, improving the institutional and policy-related environment for the development of high and new technological industries. Second, enhancing the independent innovative capability of enterprises. Enlarging input in research and development, spurring the integration of production, education and research and speeding up the construction of enterprises' technological development centers. At the same time, importance is attached to using high and new technology to transform traditional industries. Third, vigorously pressing ahead the development of information industry.

Fourth is pushing forward trans-trade, trans-regional and trans-departmental association, and further optimizing the allocation of resources. In line with the State policy for industrial development, Shanghai has actively integrated itself with central departments and fraternal provinces and cities, avoided redundant construction, gave play to respective advantages, promoted common development and enhanced the controlling force and driving force of the State-owned economy. For example, in the field of pillar industry, the Baoshan Iron and Steel Complex and the Shanghai Iron and Steel Company have entered into association and optimized the product mix.

To maintain reserved strength for Shnghai's economic development, we must further promote the optimization and upgrading of the industrial structure. Industrial structural readjustment is the eternal theme of enhancing Shanghai's comprehensive competitiveness. Success in solving this problem not only can break through the bottleneck restriction on the current economic operation, but also is the inevitable choice for maintaining Shanghai's sustained economic development next year and a number of years ahead. Next year Shanghai will still need to earnestly strengthen Party leadership over the economic work and, centered closely around the theme of structural readjustment, mainly grasp the following three aspects of work.

First is further promoting the reform and development of SOEs and conscientiously implementing the plan for SOEs to revert deficit to profit and free themselves of difficulties. Next year, the area of loss suffered mainly by large and medium-sized local SOEs will be kept within 15 percent. At the same time, in accordance with the general requirement for the establishment of a modern enterprise system, earnest efforts should be made to properly solve five problems, namely, the diverse, and multi-channeled investment and fund-collection by SOEs, the trans-regional, trans-departmental and trans-ownership asset operation, the formation of a science and technology innovation system with enterprise as the center, the participation in distribution by various elements, the rational flow of labor force and re-employment through the market.

Second is implementing the principle of simultaneously tackling high and new technology and the innovation of traditional industries and pushing forward industrial upgrading with the innovation of science and technology. Shanghai should, on the one hand, grasp the development of high and new technological industries to seize the command height for the development of newly emerging industries; and, on the other hand, grasp the technological innovation and the upgrading of products of existing industries and promote the integration of technological capital and industrial capital, following the road of scientific and technological innovation with unique Shanghai characteristic.

Third is expediting the strategic readjustment of the State-owned economy, and promoting the common development of the economies of various types of ownership. Shanghai should, on the one hand, concentrate on enhancing the competitiveness and controlling force of its State-owned economy and give play to the leading, supporting, infiltration, demonstration and guaranteeing role of the State-owned economy. On the other hand, it should explore ways for the establishment of a mutual motivation mechanism featuring the withdrawal of State-owned capital and the entry of non-governmental capital for ordinary competitive trades, and create an investment environment advantageous to the common development of different types of economies.