Jiefang Daily: I’m from Jiefang Daily. Your press release says Shanghai’s economy grew at a high rate of 13.3 percent, or a rise of 1.3 percentage points (from last year). Could you tell us what the driving force was? In addition, what is your forecast on the growth environment and general trend of the city’s economy in 2008? Thank you.

Cai Xuchu: Thank you for the question. I’ll answer the first question first. Shanghai economy recorded a 13.3 percent growth in 2007, a high rate for the past few years. I attribute the driving forces to two factors: One is the industrial supply and the other the market demand. In terms of industrial supply, the city saw further consolidation of its pattern of economic growth being boosted simultaneously by the agricultural and industrial sectors. As said in Mr Pan’s press release, industrial growth continued to speed up. The output of the above-scale enterprises citywide increased 1.4 percentage points over the previous year. Take the six pillar industries. They grew 19 percent, above the city’s average growth rate. The service sector recorded a quite balanced growth, and the financial, logistic and information businesses grew at a fast rate. The growth rate of the sector is 15.2 percent over the previous year, and is the fastest in the past 10 years. It is the first time that the service sector has grown faster than the industrial sector over the past few years. So the (good) pattern of growth of the industrial and service sectors is further consolidated.
In terms of market, the demand is relatively balanced. The retail sales of the consumption commodities grew 14.5 percent in the year, the highest growth rate in nearly a decade. The city completed 445.861 billion yuan worth of investment, up 13.6 percent year on year. The export increased 26.7 percent year on year. As to the market demand, the consumption growth remained faster than that of investment. Therefore, the pattern of market demand is good. I cited the above two factors to illustrate that they are main driving forces behind the 13.3 percent growth of the city’s economy.
Your second question is about the growth environment for the city’s economy. Our scenario comes from the following factors. The economic environment both at home and aboard is favorable for Shanghai. Internationally, the subprime crisis of the United States does influence the global economy, but people still have an optimistic outlook for the world economy. A dominant prediction is that the global economy will grow at about 4 percent in 2008. So I think the international environment is still favorable.
Domestically, there are many factors favorable for our nation’s economy. Firstly, the look-ahead indicators. In the fourth quarter, the statistics bureau calculated many look-ahead indicators, for example, the output-to-sales ratio of industrial products, the total cargo transport volume, the inventory of the finished industrial products, which all show a positive trend. Secondly, the statistics bureau’s monitoring system of the macro-economic operation shows a stable index for the comprehensive performance of Shanghai’s economy, with most of the indicators in the boom range. These indicators suggest the economy has a favorable growth environment in 2008. Thirdly, the supply and demand. In terms of supply, key industries like steel and petroleum will encounter volatile factors because of the prices of raw materials. An enough supply of raw material will give a big boost to the city’s economic growth. In terms of demand, I think the market will probably maintain the growth trend seen in the past two years, and the domestic economy will keep its growth rate. Because of this year’s Olympics, related projects, including those urban construction projects, will receive steadily growing investment.
Our judgment on the export is that our country might be affected one way or the other by the US subprime crisis or by its impact on the US economy, but our 2007 statistics shows that the influence from that is not so obvious in that Shanghai’s export to the US still grows at about 20 percent. If the aftermath of the subprime crisis does not intensify in 2008, our export will not be affected too much. So in terms of demand, the investment, consumption and export will prop up the city’s economic growth in 2008.
Last, in terms of resources. Shanghai has enough supplies of fund, energy and land. Nevertheless, as Mr Pan said in his press release, problems will crop up in the economic development, and we have to keep a close eye on that and do our best to solve the problems in 2008. For example, we have a hard job of cutting down on energy consumption and reducing pollution and controlling the price rises. Anyway, this year’s economy will maintain the growth trend of 2007. Thank you.

2. Shanghai Television Station: I’m from Shanghai Television Station. My first question is for Mr Pan. The real estate market has seen active sales and the prices have grown markedly since 2007. What do you think of the current real estate market in the city? The central government will this year continue to implement the policy on tightening its control on the real estate market it adopted last year. Could you give us a forecast of the growth of the real estate in Shanghai this year? There are many housing price indicators circulating among the public, and how do you feel about the changes of the housing prices as shown by these indicators? And could you tell us whether the housing prices are included in the city’s CPI? My second question is for the spokesman. A news report today says there will be some change to the car plate auction in March, namely, a bidder will be allowed to remain online for 10 minutes to prevent network being jammed because of too many people who don’t bid. Could you tell us whether it is true or not and whether there will be any similar changes? Thank you.

Pan Jianxin: Generally speaking, the real estate market in Shanghai witnessed stable growth and followed the macro-control policy in 2007. The real estate market features three characteristics.
Firstly, the growth in investment into property development was stable, and the market demand was great. Investment into the real estate development totaled 130.753 billion yuan, up 2.5% over the previous year. Apartments sold totaled 327.917 million square meters, up 25.4%, a quite high growth rate. Inventory houses changing hands totaled 199.259 million square meters, up 16.7%.
Secondly, the growth rate of housing prices was stable. According to a sample survey, the housing prices rose 3.4% year on year and 9.3% over the end of 2006. As to the price growth trend, the prices rose from June through October, and then leveled off in the fourth quarter, meaning the market gradually returned to the reasonable level. Among the 70 major cities in China, the growth rate of housing in Shanghai was among the lower standings. The average price of apartments sold was 8,253 yuan, up 1,214 yuan over the previous year. The reason why the average price rose was that there was a smaller supply of suite-style apartments compared with the previous few years. The average price for apartments within the Inner Ring Road was 19,324 yuan, that for houses between the Inner Ring Road and Outer Ring Road 9,762 yuan, and outside the Outer Ring Road 6,234 yuan.
Thirdly, the state macro-control policy was carried out. In 2007, Shanghai strictly carried out a series of policies issued by the central government and pushed forward the construction of housing security system and real estate market system following the concept of“residence-oriented, public consumption-oriented and common home-oriented.”The system of housing security features the leading role of the government and focuses on low and medium-income residents. For example, the city saw 4.95 million square meters of suite-style apartments built last year, though the number is smaller than previous years. In 2008, the city will begin to build about 4 million square meters of budget homes. Work on comprehensive renovation of old houses also sped up, with 10 million square meters of old houses refurbished. The low-rent housing program spread to 30,300 families by the end of 2007, an increase of 7,857 over the previous year. The market system is geared toward the market demand, follows the market laws, and exercises legal and economic controls to ensure a healthy growth of the real estate market.
You asked whether the housing prices are included in the CPI. By referring to the statistics regulations issued by the National Statistics Bureau and international practice, we don’t include the growth rate of the housing prices into the CPI, because houses are partly a consumption product and partly an investment medium. However, housing prices can be reflected in some factors of the CPI, for example, the house rents, an indicator of living cost. Another example is the interest rates for mortgages. After the purchase of the house, the owner has to pay the installments, which are related to housing prices. So any rise in the interest rate can be seen in the CPI. Many other factors, including the housing agent fees and property management fees, related to housing are included in the CPI.
As I remember, I have talked about the statistic indicators about housing prices on several occasions. Mr Cai will now tell you more about them.
Cai Xuchu: How shall we understand so many housing indicators circulating in public? Besides the official housing price indicators, some commercial organizations, including some research institutes, are also working on the housing price indicators. Most of these organizations come up with the indicators based sample surveys, only varying in survey elements. I will not talk about these indicators today, but rather I’d like you to know some indicators that my bureau has published. Our reports fall into two types. One is the result of samples surveys, such as the recently published real estate price index. It is calculated by sampling 400-500 residential complexes in the city. We focus on the homogeny, and the index on rents is also a weighted mean based on the sample survey. The other is based on inclusive survesy, such as the average sales price of apartments in Shanghai announced by Mr Pan just now. The average sales price is also known as the mixed average price, which has two indicators: one is the sales sum, the other is the floor area sold. The figures are from an inclusive survey rather than a sample survey. The indicator is obtained by calculating a numerator and a denominator. In other words, the average price is obtained by dividing the sum of the sales, either finished or agreed on, by the floor areas involved. Mr Pan just announced the average housing prices in 2007, including the breakdown into different regions. Our mixed average price usually is not represented by the growth rate, but by the absolute value. The two indicators have different functions and meanings. The homogeny mentioned just now when talking about the housing prices refers to the price growth rate, and the mixed average prices mentioned afterward is a value indicator including the actual sales prices. That’s why the two indicators have different meanings. However, in respect to the analysis, the trends as shown in the two indicators should match, without obvious discrepancy. That is my brief explanation about the two indicators published by the statistics bureau.

Pan Jianxin: The index means homogeny, or the pure changes of the prices. The average sales prices, however, reflect many factors, such as the location and layout of the apartments. For example, in a certain city, the mixed average prices come down after the figures for several suburban districts are taken into account, though the price for the city center remains the same.

Chen Qiwei: About your second question. I said just now that it’s a topic press conference today, but as I have held several news conferences on the car plate auction, I’ll just give an explanation about it, but it shouldn’t be taken as a press release. Today I also read the news report by a local media outlet, but the source was neither the Information Office of the city government, nor the government spokesman nor the urban traffic administration. The new auction system will be announced to the press once the changes are finalized.

3. Xinmin Evening News: Thank you, I’m from Xinmin Evening News. I’d like to know how the non-public economic sector was doing in the past year? What were the general features of the growth? Thank you.

Cai Xuchu: The non-public economic sector has grown very fast in the past few years. According to the initial calculation, the sector in the city realized added value of 540.703 billion yuan in 2007, which represents a 17.3 percent increase over the previous year in terms of comparable prices and a grow rate 0.5 percentage point higher. In addition, the sector accounts for 45.1% of the city’s economy, up 1 percentage point over the previous year. The sector contributed 57.8 percent to the city’s economic growth.
The sector’s fast growth can be proved in figures in the past few years. In 1990, the sector only accounted for less than 5 percent of the city’s economy. However, it witnessed fast growth in nearly 20 years. The proportion rose to 28.5 percent in 2000, above 40 percent in 2004 and 45.1 percent in 2007.
To break down in terms of the industrial structure, the sector has the following features in growth. Firstly, the foreign-invested industries recorded a marked growth. In 2007, foreign and overseas-invested businesses completed 1.448373 trillion yuan worth of industrial output, up 18.9 percent over 2006, a rate higher than the city’s overall economic growth. Secondly, shareholding enterprising achieved fast growth in sales. In 2007, these businesses realized retail sales 36.544 billion yuan, up 21.4 percent, and the growth rate was 8 percentage points higher year on year. Thirdly, private businesses also recorded fast growth. In 2007, these businesses realized added value of 200 billion yuan to reach 210.08 billion yuan, raising their proportion in the non-public sector to 17.5 percent, a record high level. That’s all for the non-public sector. Thank you.

4. Eastday.com: Hello, Mr Pan, I’m from Eastday.com. The citizens have witnessed an obvious surge in commodity prices in the past year. In particular, the prices for necessities like pork, egg and edible oil all rose at above 20 percent. But the CPI the city published was only 103.2, which does not seem to match how the citizens have felt. Could you tell us why?

Pan Jianxin: The consumer prices rose 3.2 percent in Shanghai in 2007, and the figure was calculated by following the state statistics regulations. As a matter of fact, to obtain price figures as precise as possible, we collected the data twice a week, instead of every 10 days as before, to get a better picture of the price fluctuations. Then why doesn’t the 3.2 percent rise match how the citizens feel? One reason is that the price rises were mainly driven up by the prices of food, which, as daily necessities for citizens, make them notice closely the price rises. However, the price index is obtained after many kinds of prices have been calculated in weighted mean and comprehensive methods. Our price index breaks down into eight factors, including that for food. Among the top three growth rates in the eight factors for 2007, food was number one, at 9.4 percent. Among the food, pork rose 37 percent. The growth rate for living cost was a little bit lower but was still at a high level. Three other prices rose slightly but mainly plateaued off. The other two dropped, such as public transit and telecommunications, and entertainment services. CPI reflects the prices of varied commodities instead of just food, so it is lower than the public feel. This was covered in the Statistics Bulletin where you can look up for many prices.
In addition, the price index reflects the changes within the year. In 2007, the prices were stable, despite slight increases, during the first quarter. But they rose steadily up starting from the second quarter. People tend to feel very deeply about the price rises during their peak rise stage, but the CPI takes the whole year into account, so it differs from how people feel.
By the way, the nationwide price increase fit a certain pattern last year: The consumption prices rose higher in rural areas than in cities because of the relatively higher growth rate of non-staple food prices. The CPI for the nation rose 4.8 percent in 2007, including the 4.5 percent rise in consumption prices in urban areas. The rise in large cities was smaller than in the medium and small cities. Shanghai rose at 3.2 percent and Beijing 2.4 percent, which fit into the pattern involving rural versus urban areas, and large cities versus the medium and small ones.
We also face a great pressure for price increases in 2008. Internationally speaking, there are many uncertain factors over the changes in prices of gas and grain, and domestically speaking, there is also a growing trend for the prices of energy and resources products in the long term. Because of the production cycle, it will take a while for the supply and price of non-staple food to get stable. The vegetable prices are also growing fast in Shanghai as an aftermath of the snowstorms. In addition, most of the price increases occurred in the second half of 2007, the influence will linger well into 2008, signifying an estimated increase of 2.8 percentage points. So the pressure for price increase in 2008 is quite big.
In response, the city committee of the Communist Party of China and the city government have taken the following measures. One, necessary intervention has been implemented in prices of some daily necessities. Two, market supply has been ensured. Three, supervision of market prices has been intensified to prevent intentionally driving up prices, including ensuing spillovers. Four, living subsidies have been offered to needy families and low-income groups, and non-staple food supply to schools has been ensured and some subsidies provided. I’m sure the measures can prevent the prices from growing too fast. To prevent the widespread inflation, which is one of the“Two Prevents”as part of the macro-control policy issued by the central government, has been implemented in a firm way in Shanghai. Thank you.

5. SMG TV News Center: I’m from SMG TV News Center. I have a question for the statistics bureau head about the statistical specifications. In this year’s government work report, the per-capita GDP is calculated in terms of permanent residents to give a true picture of the city economic growth. I’d like to know where in the 2007 statistics bulletin the permanent residents are taken into account instead of the registry households. Do you have any plans to calculate the per-capita disposable income, living space, medical service and education in terms of permanent residents? Thank you.
Pan Jianxin: Starting from this year, we’ll calculate the GDP all in terms of permanent residents. (We used to offer two per-capita GDP figures in terms of permanent residents and registry households respectively.) It is the first time the city government has used the GDP figure in terms of permanent residents in its work report. In 2007, the per-capita GDP for permanent residents–those who have lived in the city for more than six months–reached 65,347 yuan, or US$8,594 based on the yearly average exchange rate of 7.6040. I hereby add that GDP refers to the total output for the whole year according to international practice, so (when calculating GDP) the permanent residents should be specified as those who have lived in the city for over one year. If we calculated in terms of permanent residents that have lived here for over one year, the per-capita GDP in 2007 would be 68,049 yuan, or US$8,949. As a matter of fact, as required by the principles of“scientific development outlook”and“people-oriented,”we extend our urban management and service from registry households to migrant populations, or the“new Shanghainese,”who have contributed to Shanghai’s economic growth. So we have calculated more and more figures in terms of permanent residents. In fact, many figures in our statistics bulletin were calculated in terms of permanent residents. For example, the per-capita living space figures cover some of the permanent residents from other provinces; the average salaries cover private business employees, some of whom are permanent residents from other provinces; the per-capita road area is calculated by dividing the total area by the number of permanent residents. The Statistics Bulletin released today says there were 18.58 million permanent residents. As I know, some authorities often take into account all the permanent residents when working on blueprints for the city’s urban planning, construction and other across-city services.
Chen Qiwei: That’s all for today’s press conference. Thank you to leaders of the statistics bureau and the press. On behalf of the city government’s information office,
I hereby extend my best wishes for the Spring Festival to all the journalists. Thank you.