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SCMP Reporter

CHINA'S financial centre has predicted that its economic growth will slow this year after four straight years of 14 per cent expansion.

   Shanghai Statistics Bureau chief Sun Zuyao said the city would grow 10 to 12 per cent this year, against last year's 14.1 per cent, based on current trends.

   'You just cannot have rapid growth continuously, without a slowdown in between,' Mr Sun said.

   Analysts said real growth had exceeded conservative official projections in the past four years and this was likely to happen again this year, which marks the start of the Ninth Five-Year Plan.

   Shanghai has expanded faster than the national economy every year since 1992, when ailing paramount leader Deng Xiaoping gave his blessing to the city opening its doors to foreign investments.

   Last year, its growth was about four points more than the national rate of 10.2 per cent.

   Thanks to the past years of rapid growth, the city's per capita income of 18,000 yuan (about HK$16,722) was now one of the highest in the country. Mr Sun said last year's economic growth was evenly spread out over the year, instead of being concentrated in certain months, as was the case in previous years.

   'What we saw last year was a growth of about 14 per cent for most months, where the highest and lowest rates were just a difference of three percentage points,' he said.

   This year growth would continue to come from massive infrastructure spending, robust trade and productivity increases in the state sector.

   'Under the Ninth Five-Year Plan, we are going to spend even more on infrastructure, which will help boost the economy,' he said.

    Among the major projects to be launched are phase one of a second subway line, a new airport in Pudong, a deep-water port, two ring roads and several bridges linking Pudong to the old city centre.

   Last year the city invested 25.3 billion yuan in infrastructure.

   With the emphasis on reforms in the state sector, productivity and efficiency gains would become a strong source of growth. Mr Sun said retail inflation would fall slightly to 10 to 12 per cent this year, from last year's 13 per cent.

   The country aimed to bring down the national level to under 10 per cent from last year's 14.8 per cent.

   'Despite the fall, inflation remains a problem and some residents find it hard to cope with the high cost of living,' he said.

   The city's open-door policy had led to a shift in its economic structure.

   The tertiary or services sector accounted for 98.7 billion yuan or 40.1 per cent of its economy; the secondary sector, 141.5 billion yuan or 57.5 per cent; and the primary sector, 5.9 billion yuan or 2.4 per cent.

   Analysts said Shanghai's bid to rebuild itself as an international financial sector meant the tertiary sector would grow in importance in the coming years.

   Shanghai now houses the country's biggest stock exchange, interbank market and foreign exchange market. It also has the largest number of foreign bank branches in the country.

   Mr Sun said despite the fall in contracted investment projects to 2,845 last year, the value of contracted investments rose 5 per cent to US$10.5 billion.



Shanghai growth due to strike slow patch