Deputy Secretary of the CPC Shanghai Committee and Mayor of Shanghai

Han Zheng

mayor photo

The development of Shanghai depends on you all.If you have some suggestions and advices on the construction and development of Shanghai, please write to me.

Shanghai mayor eager to draw on other’s experiences and ideas

■Economy less dependent on the housing sector

The housing sector contributed more than 15 percent of Shanghai’s economic growth in 2005. The figure decreased to less than 8 percent in the first nine months of this year. The city’s home price inflation has been effectively curbed with zero price growth in the last three months. Of all the housing projects under construction in the first nine months, 80 percent are affordable apartments.

■Serving the “second headquarters” of leading state banks

The Industrial and Commercial Bank of China, Construction Bank of China, Bank of China and Agricultural Bank of China have set up their second headquarters in Shanghai in the form of commercial entities. Shanghai will provide comprehensive services to facilitate their business growth.

■Staying optimistic for next year’s economic growth
New challenges and problems are bound to crop up in the path of development. We will work out specific measures to cope with them.

The 23rd International Business Leaders’ Advisory Council for the Mayor of Shanghai concluded successfully on October 30. Orit Gadiesh, the Chairman of Bain & Company, was elected the council’s chairperson for 2012 and 2013. The theme of next year’s meeting will be “Building the Soft Power of Shanghai.” Answering media questions after the meeting, Mayor Han Zheng said he was eager to learn other’s experiences and ideas to stimulate Shanghai’s innovation and transformation.

Details on expanded levy of value-added tax (VAT) will be announced soon.

Reporter: As one of the first cities in China to experiment the levy of VAT, how will Shanghai carry out this trial?

Han Zheng: On October 26 the State Council endorsed Shanghai to expand the levy of VAT starting from January 1, 2012. Currently, VAT is applied only to the manufacturing enterprises. In the service sector, enterprises pay the business tax. Under the new tax policy, we will replace the business tax with VAT. That is the so-called expanded levy of VAT. Some services providers will enjoy tax cut as a result and the change will benefit the service sector, promote division of labor, and optimize the allocation of resources.

It will be a regulatory tax reduction designed to support the development of the service industry. “Under the guidance of the Ministry of Finance and the State Administration of Taxation, we are working on specific provisions for the expanded levy of VAT and will publish them soon.

It is now the talented people who are free to choose employers and cities, not vice versa.

Reporter: Shanghai is aiming for future growth through innovation and economic transformation. What are the brilliant ideas made at this council meeting?

Han Zheng: For a whole day we discussed ways to build a good market system in Shanghai. The priority is to recruit enough talents for Shanghai’s “four centers.” The city boasts 165 academicians with the Chinese Academy of Sciences and the Chinese Academy of Engineering. We also have nearly 100,000 returned Chinese students from abroad, mostly from Europe and North America, who have started their career or business in Shanghai. Each year about 160,000 to 170,000 college graduates also join the work force. We also have 1,200 experts in charge of national research projects. They play a major role in Shanghai’s development.

Some council members made a thought-provoking remark. They said it is now the talented people who are free to choose employers and cities, not vice versa. Therefore, the biggest challenge for the Shanghai government is how to create good environment to attract talents to Shanghai for sustained development.

The participants also discussed how to improve the city’s market and legal systems, strengthen the protection of intellectual property rights, and improve the visa policy and living conditions. They also suggested the creation of a personal credit system. The city government will digest these ideas and suggestions and put them into practice.

■Economy less dependent on the housing sector

Regarding the speed and quality of Shanghai’s economic growth, Mayor Han Zheng said great emphasis will be placed on innovation and transformation. The city will work hard to raise the quality and efficiency of its economy and achieve breakthroughs in economic restructuring and growth pattern.

The mayor said there had been positive changes in Shanghai’s economy in the first year of the 12th Five-Year Plan, especially in the service sector. Finance, shipping and international trade have become the engines of Shanghai’s economic growth. The product mix of the manufacturing industry is further optimized. Electronics, large equipment sets, shipbuilding, automobiles, pharmaceuticals, home appliances and garment industries have all registered new growth. Heavy industry, on the other hand, is declining. The real estate industry has shown positive changes and the city’s dependence on real estate industry for GDP growth has decreased. The housing sector contributed more than 15 percent of the city’s economic growth in 2005. The figure dropped to below 8 percent in the first nine months this year, indicating the effect of the city’s economic restructuring.

Han said Shanghai did a good job in saving energy and cutting emissions in the January-September period, laying a good foundation to meet the target set by the central government. While boosting economic efficiency and optimizing the industrial structure, Shanghai managed to achieve an economic growth rate of 8.3 percent in the first nine months. This heralds a healthy economic performance for the whole year.

The mayor stressed that the core of development is to ensure Shanghai people have a better and happier life. The government is focused on issues concerning social insurance, employment, housing and inflation.

■Soaring home prices have been curbed

Reporter: How do you comment on the changes in the real estate sector and what are the new control measures Shanghai will introduce?

Han Zheng: Shanghai is steadfast in enforcing the central government’s policies to rein in home prices. As I have said, it is true that Shanghai’s housing prices are too high. The control measures we practiced so far have proven effective. Local housing price index has shown zero increase for three months. We will continue to implement the macro control policies and accelerate the construction of low-price and low-rent apartments. Of all the residential projects under construction in the first nine months, 80 percent are affordable apartments. Soon, these apartments will be distributed. We hope to do it right so that more families can move into their new homes as early as possible. Next year, we are going to lower the threshold for people to apply for affordable homes.

■Serving the “second headquarters” of leading state-owned banks

Reporter: The four leading state-owned banks plan to locate their second headquarters in Shanghai. What’s the progress? And what’s the function of these second headquarters?

Han Zheng: Shanghai will become an international financial center by 2020. Many financial institutions, particularly state-owned giants in China, have participated in the construction of the financial center.

The second headquarters will function as commercial entities. The Shanghai government will provide comprehensive services to facilitate their business growth. Several years ago, the People’s Bank of China opened its second headquarters here. The Shanghai government’s obligation is to provide good environment for financial institutions and attract more of them to open second headquarters here.

■Stay optimistic for next year’s economic growth

Reporter: We know that Europe is beset by a debt crisis and the United States’ economy is faltering. As a major city in the world, how will Shanghai face new challenges?

Han Zheng: It is indeed a big problem. We know the world economy is fraught with uncertainty. Last week the G20 Europe Summit proposed a plan to solve the European sovereign debt crisis, but it remains to be seen how this plan can be carried out. The most important thing for us to do now is to stick to the macro control measures issued by the central government. We have successfully implemented these measures and we have confidence to attain the economic and social development targets set for this year.

At the moment, our focus is on how to set next year’s targets, based on this year’s economic performance, international situation and the central government’s strategies. We are making research, evaluations and projections. The 2012 targets for economic and social development will be tabled at municipal meetings in December.

One thing is for sure that with this year’s targets fulfilled, we will be more confident about next year’s development. Though new challenges and new difficulties will occur all the time, we are prepared to solve them one by one with new measures and policies. These are what we are studying and assessing at the moment.