1. Oriental Morning Post: The data you gave us shows that Shanghai registered economic growth of 14.8 percent for the first half of last year, and 10.3 percent for the same period this year. Can you explain the reasons behind the slowdown? How should we see the situation? What are the prospects for local economic development in the second half? Second question: have you any statistics available on average property prices for the first six months of the year? Does the government consider the existing 5.1 percent increase in property prices to be a slow and steady increase? Thank you.

Pan Jianxin (director of the Shanghai Bureau of Statistics): You have many questions! I will first talk about economic issues. Continuing from the rapid economic growth of the last two years, Shanghai has maintained steady and rapid economic growth in the first half of this year. Actually, growth is not easy to achieve, owing to the city-wide efforts and achievements of the recent past. It is not easy to build upon the high starting-point of 14.8 percent for last year. Several factors have led to slower growth: firstly, it is in line with the central government's macro-adjustment targets, for instance the city's investment growth in the first half of the year was down 10.8 percentage points year-on-year. Secondly, market changes caused imbalances between supply and demand. Changed conditions in the auto-market affected the local auto industry which, enjoying a high domestic market-share, is a pillar of Shanghai industry. Changes in that market forced us to make structural adjustments and these have triggered a slowdown; another factor is again the high starting-point due to the growth recorded last year. Although experiencing slower growth, in my opinion Shanghai is currently maintaining normal and healthy economic operations, based on the following factors:

1. Regarding the background to economic growth, locally it is still propelled by the Secondary and Tertiary sectors and also by demand for consumption, investment and exports. The structure hasn't changed, so economic growth has a solid base. For the first half of this year, both Secondary and Tertiary sectors  reported increases of around 10 percent, with industrial companies registering 11.7 percent and service companies registering 9.6 percent. In the first half, excluding the auto industry, industrial companies boasted growth of more than 10 percent. For example, electronic information firms reported growth of 29 percent and whole-set equipment companies registered a gain of 23 percent, with 20 percent for the fine steel industry and more than 10 percent for the biomedical and petrochemical sectors. In the Tertiary sector, the transportation, postal, hotel, catering and computer software industries all registered growth of more than 12 percent. Financial, wholesale and retail sectors have grown at around 10 percent. The city's fixed-asset investment grew 15.1 percent from January to June this year, retail sales of consumer goods rose by 11.9 percent and exports grew 26.4 percent from a year earlier. Demand for consumption, investment and exports all registered increases of more than 10 percent. Therefore, the overall situation hasn't changed, and this is one of the factors in why we continue to experience normal and steady growth.

2. The growth in the first half reflects improvements in economic structure and quality. As regards structural improvement, for example, there is growing investment in the Tertiary sector which registered an increase of 17.8 percent in the first half and accounted for 67.3 percent of local investment. Contracted foreign funds in the Tertiary sector accounted for 50.9 percent of the city's total, up 15 percent from a year earlier. Among exports, high-tech products reported growth of 25.9 percent and contributed 37.7 percent of total export growth. At the same time, such products reported output-value increases of 23.6 percent, a much faster rate than that for industry overall. Shanghai can also boast of stronger capabilities in scientific and technological innovation, with approved patent applications up 55.6 percent and technical trading volumes up 39 percent year-on-year. Local government revenues grew by 24.5 percent and residents of both urban and suburban areas saw steady income growth during the period. I have just said that industrial profits trended downward, but based on my analysis, it only declined relative to the high levels of last year. Then, industrial profits increased by 33 percent in the first half of last year, while this year, excluding the auto sector, industrial firms experienced only a slight increase of 1.5 percent.

3. The main indicators for local macro-economic operations are all at a reasonable level, and are in line with the central government's macro-adjustment targets. For instance, local GDP grew 10.3 percent and the consumer price index edged up by one percent. From the economic viewpoint, the figures show neither inflation nor deflation, and are in a normal range. The growth rates are also in line with trends seen in other coastal cities and provinces. Shanghai has seen steady growth as opposed to the fast growth of the past few years, which will help the city to maintain sustained and healthy economic growth while avoiding extreme ups and downs.

4. Shanghai is now at a key stage in accelerating the pace of restructuring. The city is decreasing investment in some low-end manufacturing segments and increasing funding in the high-tech and service sectors. As there is a time-lag from investment to output, economic growth will inevitably slow. Thus, in a sense, this moderate slowdown is a reflection of the acceleration of economic restructuring.

I myself expect the GDP of Shanghai to keep growing at a fast and steady pace in the second half of the year, probably faster than in the first half. For example, from the standpoint of supply and demand, industrial development is likely to rebound in the latter half of the year. Of the key industrial sectors which represent the bulk of attention and resources, the automobile sector is expected to revive as new models are launched into an expanding market, while the other five key sectors will increase production once their new projects commence, either in the second or the third quarter of the year. The relatively slow industrial development in the latter half of last year may raise the growth rate of the corresponding period this year to 12 percent or above. In the tertiary sector, all sub-sectors except finance, securities and real estate will see fast and steady growth. In particular, in March we issued a directive to hasten the development of a modern service sector, and now people in all walks of life are aware of and committed to this. I expect the transformation to gradually take effect.
Because of expanding demand in the latter half of the year, consumption, exports and investment will rise moderately. The government has taken measures to ameliorate current problems so as to achieve balanced economic growth in the second half. The current unfavorable factors include the impact on companies of rising raw material costs, and seasonal power-shortages. The government has made great efforts to ensure residential power supplies, and that for major companies and foreign-invested companies, and for the normal running of the city. Of the many initiatives we've taken for the second half, one is to quicken the development of key projects to ensure a stable industrial growth rate. Another is to foster the development of the services sector, including transportation, logistics, information technology, tourism and exhibitions, and social projects especially housing. We also aim to ensure increased fixed-asset investment in urban construction, industrial renovation, environmental development and social undertakings, and focus on attracting foreign and domestic investments of both quality and size. We'll make every effort to introduce large projects which promote the development of the manufacturing and service sectors, attract more capital from home and abroad, and provide good service to businesses so as to make the city a business hub of global significance. The government has conducted meetings to move these things forward.

As for the real estate market, the prices I mentioned just now vary as to their time-frame. Some were compared on a monthly basis, some on a yearly basis, some with the average of a certain period of different years. The average price of the commercial homes sold in the first half of the year was 7,029 yuan. It rose 12.6 percent year-on-year. But within the first half of the year, the average price of commercial homes sold rose 5.1 percent. This is more direct in reflecting price changes. The figure of 12.6 percent is a comparison between the first half of this year and the first half of last year. Although there was greater growth in the latter half of last year, we just mention the 12.6 percent rise. Particularly, I'd like to explain more about this figure 12.6 percent. Last year, we calculated the average figure according to the old formula, excluding pre-sold homes. But this year, we applied to the central statistics administration to change the formula so that trading of pre-sold homes is also included because the current situation in the city is that a large proportion of home buyers pay the bill before construction is completed. As such a formula better-reflects the market situation, we gained the support of the central administration and very quickly it worked out a new uniform standard for the whole country. Therefore, the average home price we mention today refers to all properties, including pre-sold ones that are contracted but don't yet have certification. Thus the average price released by the government for the first half of last year can't be compared with this year's as it is not on the same basis. Therefore, we re-calculated and arrived at 6,242 yuan for the first half of last year, and compared it like-to-like to get the 12.6 percent figure.

2. Eastday.com: A cross-strait farm product fair has been taking place these days and it's been reported that many before they enter other mainland markets. Please tell us the Shanghai government's attitude toward this, especially as regards Taiwanese fruit? Also, the regulations on energy-saving for buildings has taken effect since the beginning of the month. As it's difficult to make changes once a building is completed, what will the watchdog do to make sure people follow the rules?

Jiao Yang:  Taiwanese agricultural products are on display in Shanghai, and I've viewed some TV reports which say these products are very popular. Some exhibitors, with insufficient supplies, have already sold out on the first day. 
The mainland has been carrying on good business exchanges and cooperation with Taiwan. Multi-level and multi-channel economic communications have created favourable conditions for the entry of Taiwanese products into the mainland.  In particular, in May Lien Chan and James Soong separately led two delegations to the mainland and held successful talks with Party Secretary Hu Jingtao and other leaders.  The in-depth discussions led to mutual understanding, and Taiwanese agricultural exports to the mainland were an important topic.

It is the following three factors that have enabled Shanghai to become a key distribution center for these products.
Firstly: it is a port and transportation hub.
Secondly: its transport system offers fast links to other Yangtze River Delta provinces and cities.
Thirdly: it is itself a huge market for fruit with a daily sale of 3,500 tons.
Meanwhile, Shanghai is speeding up plans to build an international agricultural trade center, which is intended to enhance Shanghai's role in the transportion and distribution of these products.

As for Shanghai Municipal Government's attitudes towards these imports, we are welcoming our friends in Taiwan's agricultural sector, because they are part of the family.  We are happy to provide this opportunity to them and to hold talks with the Taiwanese side on their products' sale in Shanghai, and are taking a positive attitude.  To help them, the Shanghai Administration for Import-Export Inspection and Quarantine has rolled-out policies to facilitate the trade in agricultural products.

Statistics show that in 2004, 367.6 tons of Taiwan produce in 153 batches entered via Shanghai Customs, with a total value of US$247,000.  This year, our optimism is even more justified.  After the import-export administration opens the "green channel", costs of storage, refrigeration and transport will decrease, acting as a motivator for this trade.

The initiative has five key aspects:
Firstly: all fruit from Taiwan will be inspected and quarantined at the Longwu Office of the Minhang Administration for Entry-Exit Inspection and Quarantine. The office is the closest of its kind to Shanghai's largest fruit wholesale market, and this will shorten the time it takes for the fruit to go on sale.
Second: A "green channel" will be opened for Taiwanese fruit so as to speed up the processes of entry approval, inspection-application, quarantine, inspection and release.  The time taken to accomplish the whole procedure will be shortened from the previous average of 1-2 days to around 30 minutes.
Third: Twenty-four-hour inspection and quarantine services will be provided to ensure the fruit retains its quality and freshness by minimizing delays and shortening distribution-times. Also, to speed-up the inspection and quarantine aspects, on-the-spot checks will be conducted and if no problems are detected the produce will be released the same day.
Fourth: The government will upgrade equipment and personnel training at the Longwu Office.  An appraisal lab and a sample lab will be set up at the inspection sites.  Intensive training will be instituted for staff on the production, trade and epidemic situation as regards Taiwanese fruit.
Fifth: The "green channel" is available to fruit on display at the July 18-20 Cross-Straits Agricultural Co-operation Exhibition.  An inspection and quarantine group of four officials are working at the exhibition site to supervise the expo.

The reporter's second question is in regard to energy saving within buildings, which I've noticed is a focus of the media.

The recently-unveiled "management regulation of energy-efficient architectural design" took effect on July 15.  As we know, energy-efficient buildings are beneficial to the country, public, society and in the development of a recycling economy. It is part of the development of an energy-efficient society.  In this sense, Shanghai's government will strengthen promotion, inspection, supervision and training to ensure the rules' implementation.

Firstly, we will organize promotional activities on energy-efficiency so as to enhance public awareness of underlying principles and encourage initiatives on the part of the architectural and design industries.
Secondly, in terms of supervision, we will emphasize energy-efficiency in the construction management system. So far, it has been included as one of the requirements for building design at the bidding stage, as well as in primary design plans, construction drawings and after-project checks. Housing projects which pass inspection upon completion will be awarded an "energy-efficient building certificate" and will be able to display a logo jointly issued by the Shanghai Energy-Efficient Housing Office and the Shanghai Housing, Land and Resources Administration.
Thirdly, we will further strengthen oversight and implementation of the "Management Regulation of Energy-efficient Buildings".   In late July, early August and November, the Shanghai Construction Administration Office will inspect local construction sites and newly-completed buildings for implementation of the Regulation .  Units or individuals who break the Regulation will be punished and the Office will commend those who perform well.  The inspection regime will be formalized soon.
Fourthly, the city is to train local technicians and managers in the design, construction and supervision of energy-efficient buildings.  Courses on the relevant laws and regulations on energy-saving, standard criteria and new techniques and materials of construction will be a compulsory part of the continuous learning-process of registered architects, registered engineers, monitoring engineers and others.
Finally, energy-saving construction in three areas: the newly-completed 16 million-square-meters of residential housing; the 800 000-square-meters of public buildings; and the 500 000-square-meters of existing housing.  One or two residential areas or public buildings will be chosen as experimental units for the demonstration of energy-saving.

3. Asahi Shimbun: I have two questions.  Firstly, the investment index of the local real estate market increased by 15.5 percent, down 4.9 percent year-on-year.  And the rate of increase in traded second-hand floor-space is also down, by 20.5 percent year-on-year. I'd like to know if this is the first time that these two indexes have fallen.
Secondly, in relation to foreign trade, what is the total amount of imports, and at What rate is this increasing or decreasing?  Also, what is the Consumer Price Index (CPI) compared to the same period last year?

Pan Jianxin: The decline in the rate of increase in investment recorded in the local real estate market has occurred since the implementation of several micro-control policies.  It began in the first quarter of this year, while the decline in the rate of increase of traded second-hand floor-space was registered for the first time last year.  The index climbed by nearly 30 percent in 2004 compared to only 10.8 percent, down by almost 20 percent, in the first six months of this year. In recent days, trading of second-hand floor-space has fallen further.
I believe there are mainly two reasons that have lead to the falls in these two indexes.  One is that the control and adjustment policies issued by the local and central governments in the first half, in order to curb speculation and limit over-investment, have taken effect. The other is that these newly implemented policies create more transparency in terms of both demand and supply, which directly influences market efficiency.

4. Shanghai Morning Post: Director General Pan just mentioned that the two indexes relating to the local real estate market have been falling since the beginning of this year.  Does this mean that the government has been succesful in cracking-down on and curbing market speculation?  Also can you tell us something about the direction of the local real estate market?
The second question is for Miss Jiao Yang.  The project for the western extension of Metro Line 2 is said to have been approved by the relevant department. When will construction begin and when is it scheduled for completion?

Pan Jianxin: In my reply just now, I emphasized the reasons for the falls of the price and development indexes relating to the local real estate market. In the first half, the  rate of increase in prices slowed and prices have even begun to fall slightly in recent days.  The price index in June recorded -1.2 percent.  I think the soaring prices seen in the market have been reined-in, and  this indicates the success of our micro-control policy. 
However, the real implementation date of this policy was June 1, and as usual we will have to wait for several months of observation and adjustment to determine its effect. Thus it's too early to predict future market direction.  What we can do at present is to pay close attention to the movements in the market.

Jiao Yang: I'd like to add one point.  In the second half of the year, the city will consistently and firmly carry out the policies and measures stipulated by the micro-control policy of the central government.  We will deepen and refine our policies according to the real situation on the ground.  Meanwhile, we will develop two mechanisms: a real estate market system which is honest, regular and transparent; and a housing guarantee system, which will benefit local people. 
Furthermore, the government will strengthen the adjustments in two respects.  One is to continuously support the purchase of houses for residential use.  The other is to strengthen supervision of the local market and its developing trends, trying to keep it healthy and balanced and avoid big fluctuations.

I haven't got definite information on the completion date and detailed location of each station on the extension of Metro Line 2.  The government working-group spokesperson, however, will inform you of these after consulting the relevant administrations.

5. The 21st Century Business Report: Questions for Director Pan. As far as I know, the Shanghai Bureau of Statistics began to introduce administrative reforms in the first half of this year. Did the bureau use new methodologies for the statistics released today? Could you give more details of the reforms? Why do we need them, and will the technical changes in the way we produce the statistics yield different results (for example inconsistency or fluctuation in statistical results)?

Pan Jianxin: The reform was initiated by China's State Council, which gave the order to change the administrative structure of government statistical agencies. The nationwide campaign is expected to conclude at the end of this year. The Shanghai Bureau of Statistics has three research teams now, each of which is responsible for compiling data about a particular aspect or area of society, namely urban areas, rural areas and local enterprises. The research teams are under the dual leadership of the National Bureau of Statistics and the municipal government. The local government oversees them on behalf of the National Bureau of Statistics (NBS).
Our reforms aim to amalgamate the existing working groups into one unit, which will be under the direct control of the NBS and enjoy the status of a government bureau. The city will have two statistical agencies after the reform: the Shanghai Bureau of Statistics, an organization directly under the Shanghai Municipality, and the research team working on data compilation, a department under the direct control of the NBS. The reason behind the reform is to integrate resources and improve efficiency. At the moment the research teams are small and independent and there are overlaps in terms of administrative function. The reform will streamline the research system, make it more efficient and the management of data collection more centralized. The reform will also make government statistical agencies more authoritative. After the reorganization, there will be a division of labour between the two statistical agencies, which will co-operate to produce statistics that meet both the requirements of the city and those of the country. In answer to your last question, I don't think the reorganization will affect the accuracy of the statistics because the key figures calculated by the Shanghai Bureau of Statistics are checked and verified by the NBS. The statistics submitted by us to the national bureau proved to be quite accurate in recent spot-tests and economic censuses organized by the central government. We are trusted and lauded by the NBS for having the least errors in the country.

6. News Times: I'm interested in the employment prospects of university graduates. What is their employment rate so far this year? Is it the same as last year, and how will the government promote employment growth?

Jiao Yang: According to preliminary data from local universities, the employment rate of graduates so far this year is slightly higher than last year's. Since some graduates continue to search for jobs until the cut-off date, the official employment rate is not yet available.
The Departments concerned are trying hard to encourage employment opportunities for graduates by focusing on the following four aspects.
Firstly, we will fulfill the central government's requirements by providing detailed guidance to graduates, improving their work environments and offering them assistance in starting-up new businesses.
Secondly, we will provide additional instruction, adopt favorable policies and create new employment opportunities for graduates. There are three points in this: a) College graduates will be encouraged to serve in the country's west, work at grassroots units and go to the places where the country needs them most. We will encourage more local college graduates to participate in the "2005 graduate volunteers to serve the west" project. b) We will inspire top graduates and postgraduates to teach in the city's suburban areas. We will help small and medium-sized businesses attract, and encourage them to hire, graduates. c) We will encourage graduates to open new businesses and seek more flexible jobs. A foundation called "Angel Fund" has been set up to help local graduates create high-tech enterprises.
Thirdly, we will improve employment services for graduates in four ways. a) Local universities should provide continuous and professional services to both them and the companies wishing to hire them. We will explore the potential of online databases which provide information about the supply and demand for local graduates. b) We will simplify procedures, improve efficiency and cut costs. We will train more specialists in helping them find jobs. c) Improve the online database system for local graduates. d) Helping graduates find jobs will become an important component of stimulating local employment growth. The employment services for graduates will be involved in the city's overall planning for the encouragement of employment. We will help graduates improve their competitive-edge by starting internship programs and allocating places for them to open new businesses.
Finally, we will improve the service and social security system for unemployed graduates. a) The registration system for graduates who fail to find jobs will be improved. Institutions concerned and local universities will provide registration services for those graduates who satisfy the following requirements: permanent residence in the city, graduation within the previous six months and availability for employment. They will be offered free employment services and internship opportunities. b) Jobless graduates can get their dossiers back from where they have permanent residence, register as unemployed in local labor and social security bureaux, and enjoy free employment services like training and internship.