01 June 1995 00:00 [Source: APC]
Long the most important industrial city in China, Shanghai is pushing hard to become a world city - a key centre for finance, manufacturing, and transport.
SHANGHAI'S INDUSTRIAL output accounted for 8.3% of the country's total in 1993, although with a population of 14.5m, only one in every hundred people in China live in the city. Shanghai's 8800 industrial enterprises are boosting the city's output by 18-20%/year, covering all the main sectors such as petrochemicals, speciality chemicals, ship building, automobiles, electronics, industrial machinery, textiles and foodstuffs.
Shanghai has a full complement of heavy industrial enterprises which were built up during the early years of the PRC in the 1950s and 1960s. Some 147 industrial enterprises have import-export rights. More recently Shanghai has seen a boom in the establishment of smaller scale businesses, like those that dominate its chief rival for commercial dominance, Guangdong province/Hong Kong. Many of these new enterprises are joint ventures and their first choice of location is Pudong, the special economic zone which sits astride the Huangpu and Yangtze Rivers and has been targeted by the central government to be the focal point of China's economic development strategy for the 1990s. It is due to become a hi-tech industrial zone and an international financial and trade centre.
Pudong was given extensive autonomy by the central authorities with an administrative committee which can make its own decisions on local financial and monetary affairs, planning, construction, foreign economic relations, social development, personnel and other labour issues. In Pudong foreign investors may raise capital through bonds and stocks issued in China or overseas, and they can invest in virtually every commercial sector.
Nearly 2000 foreign funded enterprises have been approved for Pudong with a total investment of some US$10bn. In order to speed up Pudong's development, the Shanghai authorities are empowered to approve both foreign and Chinese investment in the Waigaoqiao Bonded Zone to be engaged in transit trade, to grant import and export rights to large and medium sized state owned enterprises in Pudong, to approve non-manufacturing investment projects, and to approve manufacturing projects with investments not exceeding Yuan200m (US$24m).
Pudong is divided into three zones, each with a different emphasis: free trade at Waigaoqiao, finance in Lujiazui, and export processing in Jinqiao. Waigaoqiao was the first free trade zone set up in China. All enterprises there have import-export rights, free movement of goods in and out of the zone, and exemptions of licences and duties as long as their products are exported.
Shanghai is also the most advanced financial centre in China and hopes to usurp Hong Kong's position as the main financial gateway to the mainland. Progress will be restricted however until China addresses the issue of a convertible currency with full relaxation of capital controls. Once these steps have been taken, Shanghai has the infrastructure to prosper. Its bourse already trades more than 120 varieties of bonds - including government and corporate bonds and stocks. The establishment of the stock exchange in 1990 encouraged the development of other exchanges to trade metals, petrochemicals, oils, and coal.
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