1. Xinmin Evening News: I’ve two questions for Mr Chen Qiwei. One, the city has issued seniors service cards for citizens at and above 70 years old, and when will the cards come into use? Two, has the cause of the July 17 fire in Fengxian been determined? Some rumors say that the company had hired an unqualified company to plan and install fire facilities but the building passed checks of the fire department while others say another fire happened at the company on April 1 but it didn’t raise due attention from authorities. Could you confirm these?

　　Chen Qiwei: I’ll answer the question about the seniors service cards first. Some media reports covered the issue today but they are not inclusive. I’ll give you more details.

　　To ensure that local seniors at and above 70 years old can get a free ride on public transit and get better services, the city has issued 1.25 million free Seniors Service Cards that can record a ride and serve as a real-name social security card. As we know, those who applied for the card before June 15 are expected to get it by August 1 at township and neighborhood-based social security card service centers and neighborhood committees.

　　Starting August 1, the Seniors Service Card will entitle local seniors at 70 and above to free rides and other welfare services tailored for the elderly. The cardholders can take free rides on subways (except the Maglev) and buses (except the airport shuttles and tourist routes) at non-rush hours (rush hours last from 7am to 9am and from 5pm to 7pm) at weekdays and all day on state holidays.

　　The Seniors Service Card also entitles the cardholders to privileges granted by the Shanghai Seniors Privilege Certificate at more than 30 kinds of public venues like hygienic facilities, ferry, library, gallery, museum, railway, airport and cinema.

　　The city government has also urged its departments to step up supervision of the senior care services and promote an environment where the elderly are respected and taken good care of.

　　About the fire in Fengxian, the city public security bureau yesterday held a press conference, responding to some reporters’questions. The fire cause investigation team of the Ministry of Public Security is looking into the case with the help of the city police and fire authorities, and we’ll release the results of the probe in a timely manner.

　　As to the rumors, we also heard the same stories about the unqualified company and the April 1 fire. But we have ascertained that the rumors are false. The automatic fire control facilities at Rexam Shanghai’s semi-finished products warehouse were planned by the A-level Shanghai Civil Defense Construction Design Research Institute Co Ltd, and installed by the B-level Shanghai Xuyuan Fire Control Engineering Co Ltd.

　　The fire on April 1 started about 5:36pm when an unlicensed employee surnamed Wan of Shanghai Xinheng Decoration Engineering Co Ltd, which was installing the awning for the southern part of the warehouse of Shanghai Rexam, was welding. The fire spread to 350 square meters of the building, but caused no injuries or deaths. After the accident, Fengxian police put Wan under detention for 10 days and fined Tang, the legal person of Xinheng, 5,000 yuan. During this fire, the fire control facilities in the warehouse were working properly without any damage. So the rumor that“the fire didn’t attract due attention from authorities”was unfounded.

　　2. ICS: I’ve two questions for Mr Cai. Shanghai’s consumer price index was always 2 percentage points lower than the national average, but you said just now that the city’s CPI for the first half was close to the national average. So what led to this change? And what do you think of the current price trend and the price prospect for the second half? The second question: Could you say something about the raw material and factory gate prices this year? You said the city is under great pressure to save energy and cut waste, and do you have figures about Shanghai’s unit energy consumption for the first half?

　　Cai Xuchu: Everyone is concerned about the CPI, especially the national figures that the State Statistics Bureau released on July 17. Shanghai’s CPI for the first half was 107.1 (up 7.1% year on year), close to the national average, but it used to be at least 2 percentage points lower than the national average. Why is it so close to the national average this time? There are two major reasons:

　　One is the price transmission factor. During this round of nationwide price increases, the rural areas have gone faster than the urban areas, and the price growth of grain, meat and oil spread faster in the rural areas than in the urban areas. Shanghai consumers are mainly urban residents, so the city’s CPI last year was 1.6 percentage points lower than the national average. The national CPI rose to 8.7% in February and then gradually slowed, but Shanghai’s CPI has remained at a high level. This is because the growth rate of the prices in rural areas of the country have dropped sharply while the it dropped less in Shanghai where the production and operation costs are relatively high. These two reasons explain why the gap between the city’s CPI and the national CPI has become smaller and smaller.

　　Two is the price structure factor. Shanghai calculates the eight consumer products in the CPI in weights different from the central government. Currently, the price growth of food, clothing, home appliances and repair, and healthcare and personal products approaches or surpasses the national level. The four elements make up more than 50% of the Shanghai CPI, and food has been the leader in this round of price increases and the price growth of other types also accelerated, shrinking the gap between the CPIs of Shanghai and the nation in the first half.

　　The reporter also asked about the producer price. I should say the national PPI has witnessed a fast growth compared to a mild rise in Shanghai. The city’s PPI for the first half was 102.5, much lower than the national figure. However, the prices of raw materials have grown fast in Shanghai, at 11.5% in June, a rise of 6.1 percentage points over January. In addition, all the nine types of raw materials have seen price growth, with ferrous metal nearly 20% higher. The mild growth of PPI and the steadily rising cost of raw materials has widened the gap between the two indexes. In the first half, the gap reached 6.7 percentage points, the biggest in the past three years.

　　One of the macro-control tasks at present is to prevent the price increases escalating into inflation, and the CPC Shanghai committee and city government have attached great importance to the issue and taken many measures. However, I think there is still pressure for further price increases in the second half. For example, the price of edible oil is still under pressure to rise because it is closely hinged to the international market; the price of vegetables may fluctuate greatly with the weather and season. But there is little room for sharp increase of the prices of aquatic products given the large-scale farming; the production and supply of meat products will stabilize, and the price growth will slow though the prices will remain high; the prices of industrial consumer products and services will remain at the current stable trend though the growth rate will be higher than last year. In general, the market supply will gradually return to normal in the second half and the consumer prices for the whole year will tail off into the lower level. If nothing special happens, this year’s CPI is expected to be lower than the first half’s 7.1%.

　　3. 21st Century Economic Herald: I have two simple questions for Director Cai. The social consumer products recorded retail sales of more than 200 billion yuan, a year-on-year rise of 16.7%, have you counted out the inflation factors? Has the export of more than US$80 billion counted out the difference between exchange rates in the last two years, and is it a nominal rise or real rise? Another question is about the 190-billion-yuan fixed assets investment for the first half. We found that among all the provinces, Shanghai was the only one that recorded a FAI growth rate lower than 10%. Why is the city’s FAI so low and how will it affect the local economy in the second half? Does the figure indicate the effect of the macro control measures in Shanghai? In addition, the monetary data for the first half the banking regulatory bureau recently released showed that Shanghai’s loan grew at a fast rate: the city issued loans equivalent to 66% of 2007. The national figure was lower than before, but the Shanghai figure was higher. Why so? And why is it inconsistent with the growth rate of investment? In addition, could you give us a forecast of the city’s economy in the second half of this year, including the growth rate, given the energy conservation and waste reduction programs and the influences from the raw material cost and investment growth? Last question, please give us some figures about employment because the release didn’t include urban unemployment rate as well as year-on-year comparison figures. Thank you!

　　Cai Xuchu: The social consumer products retail sales and export growth rate are both nominal, without counting out the price factors.

　　About the fixed assets investment, as the reporter has said, Shanghai recorded the lowest growth rate among the provinces this year. After carrying out the state’s macro control policies, the city has seen its investment slow down since last year. The investment in the first half has the following features:

　　One, the number of newly started projects and relevant investment have dropped. The city’s investment into newly started projects totaled 21.642 billion yuan in the first half, down 3.9% year on year. Among the projects were 66 that were poised to attract at least 100 million yuan each. These 66 projects realized investment of 5.09 billion yuan. During the same period last year, the city started 92 projects with each involving final investment of at least 100 million yuan, realizing investment of 11.722 billion yuan. The number of such newly started projects and amount of investment realized during the first half were down 28.3% and 56.6%, respectively, year on year.

　　Two, investment into urban infrastructure slowed down. Urban infrastructure investment is characterized by concentrated funds injection during the preliminary stages of land leveling and house relocation and the fund’s leveling off during the rest stages. Infrastructure projects related to the World Expo have finished the preliminary development, and investment has slowed because many of these projects are in the construction stages. In addition, a big base formed by the number of newly started projects in the first half of last year also made the investment into urban infrastructure slow down.

　　Three, investment into the six pillar industries also dropped. During the first half, the six pillar industries realized investment of 30.116 billion yuan, down 14.1%. As the six industries make up 55.4% of the industrial sector, they have dragged down the amount of investment into the sector.

　　Four, fund supply has been put on tighter reins. An additional 253.25 billion yuan was pumped into construction projects during the first half, down 4.3% year on year, including domestic loans that were down 3.9%.

　　In terms of demand, the investment drop was quite big. Its influence on the economic growth is not so big but will affect the economy in a longer term. Among the three key sectors of real estate, urban infrastructure and industry, investment into the industrial sector was the biggest and will possibly affect the industrial growth in the next few years.

　　About the credit, the data of Shanghai looks better than the national figure, which can explain why the growth rate of the financial sector in Shanghai was not so slow in the first half. However, because of the slow growth of the securities businesses, the growth rate of the financial sector was not so fast as last year.

　　About employment, we have released the number of registered jobless people in the urban area. We didn’t publish the unemployment rate because the total number of employees have yet to be decided. We don’t have the number of newly added employees, but only the number of newly added jobs.

　　About the energy consumption, I think the greatest pressure among the issues in the second half we talked about just now comes from energy saving and waste reduction. According to figures for 2007 that the central government recently released, the city’s comprehensive energy consumption per unit of GDP was down 4.66%, ranking Shanghai the third among the provinces. The figures for the first half are still unavailable and we’ll publish them once the central government has assessed them.

　　The CPC Shanghai Committee and the city government have always attached importance to the work of saving energy and reducing waste, and their stepped-up efforts have brought about marked achievements: One, efforts have speeded up to improve the industrial structure, with the target of saving energy among the energy-consuming industries for the whole year set at about 1 million tons of coal; two, the program to promote big power plants while restraining small ones gets a further boost in the hope of further reforming the power distribution system and reaching the goal of saving energy and cutting pollutants; three, some key energy-consuming businesses have reached the international advanced level of per-unit energy consumption, and the energy-saving effect is generally speaking outstanding.

　　However, we feel that there will be some difficulties in energy saving and waste reduction in the second half because of the following reasons. One, energy consumption by the industrial sector has remained at a high level, and the energy use by major energy-consuming businesses like petroleum and chemical, steel making, power generation and transport will keep growing and some newly started projects will also be big consumers of energy. Two, the trend of increasing energy consumption by households will continue. Three, energy use by the transport sector will also greatly increase because of their rising traffic handling capacity and seasonal factors. Four, there is limited room for phasing out outdated production businesses and reducing energy use. Given the slowing economy, there is still great difficulty in realizing this year’s goal of saving energy and reducing pollutants.

　　4. Wenhui Daily: I’ve two questions for Mr Cai. The city’s GDP rose 10.3% in the first half. The growth rate was lower than the same period in 2007 and was not a high one among the average ones across the nation. What do you think of this phenomenon? The second question, could you tell us what are the favorable and unfavorable factors for the city to keep its economy on a stable track in the second half? Thank you！

　　Cai Xuchu: I’ll answer your first question first. The city’s GDP grew 10.3% in the first half, slower than the national level of 10.4%，which has rarely happened over the years. The reasons, I think, are in the following:

　　One, in the macro perspective, Shanghai is open to both the domestic and international markets. Its close ties with the overseas markets subject it to direct influence from the world economy. Meanwhile, the city has make great efforts to restructure its economy in a timely and spontaneous way when transforming its economic growth mode, and its implementation of the state macro-control policies has shown outstanding results. So its economy slowdown is normal and is what the macro-control aims at.

　　Two, speaking of the industry’s driving force, Shanghai has taken the initiative to adjust its industrial structure and speeded up the program to phase out some“highly energy-consuming, highly polluting, resources-exhausting”businesses, at the cost of its GDP. The driving force of the six pillar industries weakened in the first half because of market supply and restrictions from resources, impeding to some extent the sustained growth of the industrial sector. The growth of the service sector also slowed down because of rippling effect of the fluctuating markets in pillar industries such as securities and real estate. Last year, the city’s securities and real estate industries contributed 19% to the city’s economic growth, but in the first half of this year, the sector contributed nothing, and the real estate contributed less than nothing, which cost the GDP 0.4 percentage points.

　　Three, speaking of the demand for growth, the following three demands have displayed new changes because of the fluctuating world economy, the continual natural disasters in the nation and the intensifying inflation pressure. The demand for investment dropped sharply, with the growth at a record low in the past seven years. The strong demand for consumption also was dampened. The consumption growth was at a nominal 16.7%, but it was lower than in other eastern China areas. The demand for export has witnessed accelerating growth. The indicator for export demand fared better than that for investment and consumption demand. Despite a grim world market, export growth still reached 25.1%, which is hard to reach, up 4.2 percentage points year on year.

　　How shall we respond to the phenomenon that Shanghai’s economic growth was slower than the national level? I think we should look at the issue in the following perspectives:

　　One, it should be noted that Shanghai’s economic growth is stable and highly resistant to fluctuations. Since the beginning of this year, the national economy has slowed down, but Shanghai’s economy has maintained stable growth. In terms of GDP, it dropped 1.1 percentage points in the first quarter year on year while it decreased at least 2 percentage points in Zhejiang and Guangdong. In terms of industrial output, the growth rate plummeted 3.4 percentage points and 4.9 percentage points respectively from January to May year on year in Jiangsu and Zhejiang, and 4.2, 3.4 and 2.9 percentage points respectively in Beijing, Guangdong and Shandong, but in Shanghai it remained at the same level as last year at 13%. In terms of export, it dropped 5.3 percentage points from January to May year on year in Zhejiang, 7.5 percentage points in Jiangsu, 9.7 percentage points in Guangdong and 16.1 percentage points in Beijing, but Shanghai has displayed a strong cushioning ability, with its export growth rising 5 percentage points.

　　Two, it should be noted that the slowed economic growth in Shanghai is an indication of periodical adjustment. In terms of the medium and long-term development of Shanghai’s economy, the annual growth rate has been kept at two-digits since 1992, the growth curve has shown regular cycle, and last year’s 14.3% was the peak of the growth curve over the past few years. The slowdown in the first half was the indication of its periodical adjustment and a natural one in the city’s adjustment of its industrial structure.

　　Three, it should be noted that it is a short-lived phenomenon that Shanghai’s economic growth rate is lower than the national level. The city’s GDP has been higher than the national figure since 1992, at least 2 percentage points higher in most of the years and less than 1 percentage point higher in 1992, 2005 and 2006.The growth rate of Shanghai’s economy in the first half of 2005 was 0.2 percentage point lower than the national level. It should be noted that 10.3% is not the lowest in Shanghai’s history, and the growth rate is high enough and is a temporary phenomenon. Given the development environment, the difficulties and unpredictable factors in the second half, I think the city will take concrete measures to break through the bottleneck and obstacles in its economic growth and try to speed up the economic development while ensuring a continued and stable growth.

　　Our analysis has discovered the favorable elements for the city to keep its economy on the stable growth track in the second half:

　　In terms of the industrial sector, the output will continue its stable growth trend. In the tertiary industries, though the financial and real estate businesses are unpredictable, the information technology and transport businesses will sure report stable and fast growth. For the whole year, the tertiary industry will keep the stable growth rate, though a little bit lower than last year.

　　In terms of demand, the consumption will continue to grow, with the retail sales of social consumer products maintaining the steadily growing trend seen in the last two years. Two, export will accelerate. Three, investment will regain the momentum gradually. In the second half, the growth rate of the investment into fixed assets is expected to pick up gradually. In terms of energy supply, the demand will be basically met except for a tightening supply of natural gas. The supply and demand of power this summer will be generally balanced and able to ensure normal operation of the city, including the needs of the households and the production of key industries, and supply of finished oil and coal will be stable and meet the need of the city.

　　Speaking of the unfavorable factors, industrial consumption of energy will remain at a high level, and newly started projects will increase the energy consumption by a large amount. The unpredictable real estate and securities markets and pressure for steadily growing prices will hamper the economic growth in the second half.

　　5. Hong Kong Cable TV: With the Olympic Games drawing near, has Shanghai made assessment of its security work and have you heard some rumors about possible emergencies？How is security work for the Games going? A rumor said yesterday that some areas at named parks in Beijing will be set apart for demonstration, will this happen in Shanghai? Thank you!

　　Chen Qiwei: I’ll answer your questions. The first question is about the possibility of emergent incidents. Sorry we are unable to predict on that. But at the press conference of the city public security bureau yesterday, bureau officials said police had worked out detailed plans to counteract potential incidents that endanger public security.

　　Second, I should say Shanghai has well-organized security system. Shanghai follows the requirements of the central government’s Olympic security coordination team and the BOCOG in strengthening security work by combining technology and human resources. I’ve already gave detailed introduction to the program at the Olympic cities press conference at the Games press center last Friday. You can check the Games’official Website for further information on the issue.

　　Third, about the venue for demonstration during the Olympic Games, so far I have no information about it. If I have such information, I’ll tell the reporters at the next press conference.

　　6. Eastday.com: I’ve a question for Mr Cai. The public is very concerned about the housing price. Media reports over the past days say the transaction volume of houses in Shanghai has decreased and the prices have gradually moved downward. Could you tell us the general operation of the city’s housing market in the first half and forecast on the market trend in the second half. Thank you!

　　Cai Xuchu: The next hottest topic after prices among the public is the real estate market. Since the beginning of the year, the city has continued to enforce the central government’s policies to strengthen and improve the control of the real estate market, which has ensured a stable market and growth direction as aimed by the central government’s macro control policies. The operation of the market has been characterized by“two stable’s and one drop,”namely, stable development and stable investment, and drop in sales and little fluctuation in prices.

　　First, the real estate development and investment have been stable. In the first half, the city finished 64.33 billion yuan worth of investment into the real estate development, up 3.8% year on year, and the sum accounted for 32.6% of the investment into fixed assets, up 0.5 percentage points year on year. Among the investment, 40.74 billion yuan was channeled into newly constructed apartments, up 3.2% year on year and accounting for 63.3% of the investment into the real estate development.

　　Second, the total floor area of sold apartments dropped. In the first half, the city sold 12.2891 million square meters of commercial apartments, down 18.5% over the same period in 2007. Among the sold apartments were newly constructed ones totaling 10.7032 million square meters, down 22.4%.

　　Third, the prices of the commercial apartments remained stable. In terms of chain index, it was down 0.1% in February, and remained the same in March and May but rose slightly in January, April and June, at 0.2%, 0.1% and 0.1% respectively. The aggregate chain rise totaled 0.4% in the first half. In terms of year-on-year index, the growth rate dropped from month to month, and it rose 9.7% in the firs half year. It is mainly because of the tail-raising factor, with the new price rise factor at 0.4 percentage points. A trace monitoring of the sales prices of sample residential complexes discovered that the proportion of the complexes that recorded leveling chain index prices each month reached 90%, and it reached 96.9% in June.

　　About the market trend in the second half, we think that the favorable factors for Shanghai’s stable real estate market will remain. The city will continue to follow the macro-control principle of“residence-oriented, consumption-oriented, and common houses-oriented,’’step up its leverage efforts in both supply and demand, emphasize on ensuring land supply for budget houses, low-rent houses, apartments of medium and low prices and of medium and small floor areas, and epitomize the structure of market supply. At the same time, work will speed up in supplying low-rent houses and building budget houses. In general, the city will keep the real estate market on the stable track.

　　Chen Qiwei: Thank you all for today’s press conference.