This metropolis has decided to answer global economic challenges by putting the majority of its fixed assets investment into high and new technology industries over the next three years, according to report of China Daily.

High and new technology industries including telecommunications, biotechnology and new materials, will get 110 billion yuan (US $13.25 billion), accounting for 45 per cent of the city's total investment of 240 billion yuan (US$29 billion) for the 1999-2001 period.

The investment is the biggest ever received by the industries, whose share in Shanghai's industrial volume has been expanding every year and is expected to reach 20 per cent next year, up from 17.5 per cent this year.

The six pillar industries - automobile, steel, petrochemical, biotechnology, home appliances and power - will get 80-90 billion yuan (US$9.6-10.8 billion) over the same period.

"Global competition requires technological innovation and new technology research should get more resources," said Gu Changji, deputy director of Shanghai Municipal Economic Commission.

"Technology will help Shanghai-made products improve their global competitive edge and expand exports," he said yesterday.

Although some Shanghai-made products lead on the domestic market, Gu claims Shanghai will face difficulties bringing its industries up to global standards and expanding foreign markets, especially when China is admitted into the World Trade Organization (WTO).

"WTO accession will be a double-edged sword. It will make our exports more competitive, especially traditional items like textiles and garments," he said.

These items are expected to get easier access to European, Japanese and US markets because the WTO does not allow discriminatory policies towards imports from member countries.

But capital-intense sectors such as automobile, telecommunications, banking and insurance will face tough foreign competition in the WTO age.