"Despite various uncertainties, positive factors will play the dominant role. Shanghai is in an upswing," said Pan Jianxin, director of the Municipal Statistics Bureau, adding that he was optimistic about the city's fortunes in 2003.

Shanghai reported a gross domestic product (GDP) of over 540 billion yuan (US$65 billion) last year, 10.9 per cent higher than in the previous year. This is the 11th consecutive year of double digit growth and the highest growth rate recorded over the past five years.

As China's most export-dependent city and a hot destination for foreign investment, Shanghai will benefit from global economic recovery, Pan said.

The service industry, which composes 51 percent of last year's GDP, is expected to expand rapidly as more foreign investment pours in, especially into the telecommunication, tourism, finance, logistics and exhibition sectors.

Industry, which contributes 47.4 percent of total GDP, also remains a key sector. Thirty major industrial projects worth 99.6 billion yuan (US$12 billion) will start construction in 2003.

Huge investment in projects related to World Expo 2010 will also help spur the city's economy.

Pan also noted that the private sector has huge growth potential. The non-State sector grew 23.9 percent last year to 172.8 billion yuan (US$20.8 billion), accounting for 31.9 percent of GDP compared with 28.6 percent in 2001.

Shanghai is aiming to become a truly international city with a well-regulated and transparent market to increase its competitiveness, which will in turn benefit the city's economy, he added.

However, challenges still remain.

Apart from concerns over the stand-off in Iraq and its effects on the world economy, China's World Trade Organization membership will also have an impact.

"China's World Trade Organization membership will have further impact on Shanghai this year, the results of which are hard to estimate," Pan said.

But the performance of the stock market worries him.

The gloomy stock market last year largely constrained the development of the city's financial sector, which only contributed 10.8 percent of the city's GDP, according to Pan.

(China Daily January 30, 2003)