At the regular press conference on June 9, Shanghai Municipal Government representative Jiao Yang and Shanghai Economic Commission deputy directors Le Jingpeng and Wang Jian answered reporters' questions.

1. China Business: It was said in a previous press conference that by 2010 Shanghai's power generating capacity will double. Is there a specific timetable?

Wang Jian: The Shanghai government is focusing on the construction of added energy sources. By 2010, local energy supplies are expected to double, with power supplies from inside the city accounting for 70 percent of the total and those from outside the city providing the rest.

2. Eastday: What measures will Shanghai take to save power this summer? A directive was issued recently that the temperatures in government buildings, shopping malls, office buildings and hotels should not be lower than 26 degrees Celsius. How was the standard established?

Wang Jian: In summer, the massive use of air-conditioners usually consumes the majority of the local power supply. However, in spring and autumn, a total power supply of 11 million kilowatts is enough for the city. Shanghai has 6.5 million air-conditioners, so the city power grid will be under great pressure as a result of the shortage of power.
Shanghai has issued a series of power-saving measures which are expected be efficient. First, the use of air-conditioners in shopping malls and office buildings should avoid peak periods (9 a.m.-11 a.m., 1 p.m.-3 p.m. and 7 p.m. -9 p.m.); second, air-conditioners should be washed more frequently, an effective way to save power; third, 26 degrees Celsius was determined from data provided by the local health department. In summer, the most comfortable temperature for people in public places is between 24 and 28 degrees Celsius, and a temperature of between 25 and 28 degrees Celsius is suggested for hotels, office buildings, shopping malls and meeting rooms. We think it proper for the city to set 26 degrees Celsius as a standard.
Recently, we received information that the Japanese government has set their air-conditioner temperature at 28 degrees Celsius for government departments, and that Jiangsu Province has also set the temperature at 28 degrees Celsius for government departments. Shanghai set the 26 degrees Celsius standard on the basis of actual health recommendations in the city.

3. Economic Observer: Shanghai's first foreign-invested water plant will become state-owned. What's going on in this project? In expanding the market mechanism into the public utility sector, will the local government adopt any protective measures to avoid uncertainties caused by uncertain polices?

Jiao Yang: We are not clear about the project you mentioned and will reply to you after getting the necessary information.

4. China Business Times: You have mentioned that Shanghai will give priority to developing an advanced manufacturing industry. I have learned from recent interviews that local industries are being transferred to other places such as Zhejiang Province. Can this be considered as part of the plan to re-structure the city?

Le Jingpeng: The manufacturing industry is an important part of the local economy. Currently, the transference of international industries is under way, and at the same time, industry in Shanghai is being adjusted in an orderly way. Shanghai has advantages in some fields, such as in key manufacturing technology for system integration. We will not only make efforts to develop of our own industries, but also accept technological transference of international industries.
At present after a comprehensive consideration of energy sources, lands, labor costs and economic returns, we have develop an equipment industry in the Luchao New Harbour City. Some industries unsuitable for development in the city will be encouraged to transfer to other places, while those unsuitable for development in China will be eliminated on the spot.

5. Shanghai Morning Post: Last year due to power shortages, the outdoor lights on the Bund were turned off. Will the same measures be taken this year? Shanghai has enacted a series of measures to adjust the overheated local real estate industry. Have they had any preliminary effect? What will the upcoming local land reserve standard include?

Wang Jian: Last summer, the outdoor lights were turned off from 7 p.m. to 9 p.m., and were turned on again after 9 p.m. as the city suffered from a long sweltering summer last year with 41 days above 35 degrees Celsius. I remember we made the decision on the afternoon of July 29 last year. This year, we have no such plan, and we are confident about this summer's power situation, which will be better than last year.

Jiao Yang: A series of measures have been taken recently to achieve a balance between housing supplies and demand, to curb the excessive inflation of local housing prices, to avoid price fluctuations and to improve the local residents' living environment. Our efforts have been effective, with the growth in housing prices slowed in the first four months of the year. Property prices in the city during the first four months showed only modest increases over the previous month: January (1.9 percent), February (0.9 percent), March (1.0 percent) and April (0.9 percent), with combined price increases at 4.7 percent over last December's. However, as the city's real estate market is open, many factors will affect local housing prices. We must improve our evaluation of the impacts that the adjustment policies will have on the market and track and study the changes in the market to make corresponding adjustments to our policies.

6. German Industry and Commerce in China:  I have a question for the spokesman: in Germany, government organizations and departments try to reduce energy consumption by improving the buildings-such as by using heat insulating walls.  Has the Shanghai government adopted such measures?

Le Yingpeng:  Using building design to save energy has aroused attention in many places, particularly since the power shortages that occurred last summer.  The situation is related to the use of air-conditioners, building design and a low energy use rate.  As far as I know, the local construction committee is drafting new standards for building materials and architecture, such as new wall materials, to improve the energy use rate.  New technologies, like windows that can reduce heat conduction, are being developed.  Meanwhile, we're trying to use natural energy sources.  For example, in some residential quarters, solar energy is being used to supply power to some residences on a trial basis.  Successful experiences from Europe and America can also be employed. In a city like Shanghai, I believe there are many places to apply these successful experiences.

7. Jiefang Daily: There are two data in the business development report: the total volume of social consumption in the past 10 years has been steadily growing, while the per-capita consumption has seen very slow growth, or even none.  Can we conclude that the growth of social consumption results from the growth of population?  Has Shanghai any plans to boost domestic demand?

Le Jingpeng: The total growth of consumption ranged between 8 and 9 percent in late 1990s.  The role of individual consumption in driving up the economy has been small, leaving plenty of room for development.  There's much work to do to restructure the commercial sectors.

Wang Jian:  Currently, general education and telecom spending are not included in the statistics for per-capita social consumption.  This is a new problem we've encountered.  The situation reflects the changes in residents' spending patterns.

8. News Times:  I've seen this metro ad: "'Change' is a must in the summer".  Here, "change" refers to the frequency conversion air-conditioner.  There are a lot of non-frequency-conversion air conditioners on the market.  Will the government ban the sale of these non-frequency conversion air-conditioners? 
Also, it is said that last summer some companies were notified of power supply cuts just minutes before the cuts occurred.  Will that happen this year?  What procedures will the government use?
           
Le Jingpeng: Frequency conversion air-conditioners are highly efficient energy-saving products.  The power usage of a traditional air conditioner compressor is much higher than that of a frequency conversion air-conditioner. There's a report that in Shanghai sales of kinetic style air-conditioners with an efficiency rating below 2.3 are banned.  This is not a rule by the government but a requirement by the electric industry for its member companies.

There are two views.  Some say Shanghai's efficiency rating for air conditioners should be raised to 2.7, and others say it should be moved up to 3.  I personally support the latter view.  Since, currently, the upper level of efficiency ratings for air conditioners is 5.6, why don't we raise the requirement to that level?  Because of the improvements in the air conditioner industry, we believe the efficiency rating requirement should be increased to reduce the burden on the city power grid.  Increasing the rating will reduce the power use.  But whether it is the only product we must consider in order to solve the power shortage problem is not yet determined.  Regardless, the frequency conversion air-conditioner is superior.

Wang Jian:  As for the power cuts, I will make a clarification.  This summer, the municipal government's principle of power supply is to limit power use, not cut power supply.  Unless there is an unforeseen accident in Shanghai, there will be no power cut.  As for notification of a temporary power cut, we experienced that last year due to unforeseen problems with the external power grids.  Since some of Shanghai's power generating grids are outside the city, when problems occurred we had to temporarily cut power supplies for the safety of the network.  This year, we will try to avoid such situations.  They will not occur unless there is a sudden accident.
                

As for the measures to be taken, one is that companies involved in high energy consumption and pollution are unsuitable for Shanghai's industrial development.  These enterprises (there are about 500) are the main companies that will be affected by the power-conservation program.  They will be supplied with power only from 12 pm to 8 am to ensure a power supply for other enterprises and residents.  The other measure is that some enterprises will have their employees take vocations on a rotating basis.  We have arranged for seven groups of companies to operate on shifts after the plum rain season is over.  During this period, local primary and secondary schools are on vacation.  Employees of these companies may take their children out for traveling.  This may also boost industries such as tourism.
                 

9.  The Bund:  About 30 percent of Shanghai's power supply is from outside the city and 70 percent from within.  As far as I know, the power is mainly generated from coal.  How can you ensure the coal supply?  External power supplies are sometimes unstable and accidents happen.  My question is, does Shanghai plan to depend on a power supply from within the city or outside the city?
                     

Wang Jian:  Shanghai is faced with supply problems for coal and power, and sometimes also with floods.  Shanghai Party leaders and government officials are paying close attention to the coal supply.  The city will make efforts to increase the coal supply.  And we are trying to raise coal reserves to 10 to 12 days' usage in order to avoid the impacts of shortages in the coal supply for power production.  However, supply problems will remain because the growth of coal price is rapid.

Some 30 percent of the power supply is from out of the city.  We are very grateful to the provinces.  To back up Shanghai's development, the provinces overcame their own difficulties to provide power to the Shanghai people.  This January, city leaders visited the provinces.

As to the problems occurring with out-of-city power grids, they are related to climate, coal quality and power networks.  Since some of the power is waterpower, power-generating efficiency is not high.  What's more, Shanghai is at the end of the power network which supplies power to the entire six provinces and Shanghai in East China.  Recently, the East China Power Co has taken effective moves to ensure the stability of Shanghai's power supply from outside the city.
              
10. Berita Generasi: A figure in the handouts says the combined value of the output of the service sector has dropped below 50 percent of the city's total production the first time in three years. The service sector is a pillar of Shanghai's industry, would you explain the reason for the decline?

Le Jingpeng: The drop is mainly due to the situation in financial sector. On the whole, Shanghai's service sector is developing stably, yet fluctuations exist in some fields.

11. Shanghai Youth Daily: This summer, government departments and some recreational arenas are required to set their air-condition above 26 degrees. Will they be punished if they fail to meet these requirement?
You said some companies may stop production and give workers holidays on shifts during heatwaves. What kind of companies are likely to follow this practice?
Also, would you give some details about artificial rainfall?

Wang Jian: The temperature standard is a general requirement, we hope government departments and office buildings may take the lead in setting air-condition temperature at 26 degrees. It is good for the health of the people in the workplace. But we have not stipulated punishments for breaking this rule.
So far, Shanghai has not conducted artificial rainfall. The weather bureau is presently working out a plan on this matter.
Holidays on shifts is a voluntary program for companies: they may carry out the practice according to their production plans. The holiday shift program will not be employed in the pubic service sectors. To date, companies that plan to carry out the program have already submitted their draft plans to the city government.

12. Nikkei: Will Shanghai continue the practice of auctioning off driving licenses after the central government issued the new regulation on transportation? The former real estate heavyweight Zhou Zhengyi was sentenced to three-year imprisonment. Has he appealed to the court?

Jiao Yang: To date there is no decision to stop the auctioning of drivers licenses. The sentence to Zhou Zhengyi has not yet taken effect as the appeal period has not expired.

13. Shanghai Financial News: Please talk about the renovation project in Wujiaochang area.

Jiao Yang: After the conference I will check the appropriate material and give you the information later.

 
14. Oriental Morning Post: According to the figures in the handout, the total amount of consumer sales increased by 12 percent this year, compared with 8 percent last year. What's the reason of this increased growth? What are the percentages of house and auto sales in this figure?
you have just said that about 500 companies plan to suspend production to avoid peak power load times this year. Will the government compensate them, as it did last year?

Le Jingpeng: Growth in automobile sales, sales of construction materials and real estate sales is relevant to the increased sales volume. However, we cannot provide the exact percentages here. I will check and give you the figure after the conference.

Wang Jian: The 500 enterprises were chosen according to Shanghai's general industry development policy. These companies can shift production to the nighttime or weekends. However, we won't compensate them for halting production. Actually, in the long run, these high energy-consuming industries may not be suited to Shanghai.

15. Tai Kong Po (Hong Kong): The Shanghai government is planning to apply energy-saving devices in some power-consuming industries. How is the plan going? Will the government consider importing facilities from abroad and installing them in domestic factories?

Le Jingpeng: According to the restructuring principle of Shanghai's industry, the city will implement encouraging, stabilizing or discouraging policies to different industries according to their compatibility with the city. Part of the stabilizing program is to improve the company's equipments. Previously, we've installed advanced facilities in old factories, and take a market-oriented approach toward operations. The result have ben satisfying. Similar practices will be adopted at the next stage of restructuring.