The city has made an effort to build an innovation system and it has become a pilot city for national technical innovation projects.

High-tech equipment manufacturers and modern service businesses have been developing there.

In the first eight months of this year, high-tech enterprises had an output worth 88.25 billion yuan, an increase of 20.6 percent over the same period of last year. Total profits were 7.9 billion yuan, a 13.6 percent increase.

The technical innovation pilot-city announcement was made this February, by six ministries.

To date, the sales of the equipment-manufacturing sector have accounted for 31.3 percent of the city's gross sales of industrial enterprises above the designated seze. Output value of high-tech industries accounts for 46.5 percent of the gross output value of industrial enterprises above the designated size.

In 2009, Qingdao's high-tech industries generated more than 445 billion yuan in output value, up 15.7 percent over the same period last year.

Last December, Qingdao decided to concentrate industrial development in the following: service sector, with banking as the core; the high-tech marine, information, and new materials sectors; and the modern-equipment manufacturing sector, with motors, locomotives, ship-making and energy as the core.

The modern-equipment manufacturing sector is expected to have 540 billion yuan in output value by 2012, accounting for 36 percent of the city's total.

Total value from the high-tech sector will reach 650 billion yuan, and added value of the modern service sector will hit 190 billion yuan.

Qingdao wants to become an international industrial region by 2020, which will have a great influence on the whole of the Shandong Peninsula.

Manufacturing will play a key role in the city's economic development. The output value of industries like home appliances, electronics, motors, and shipbuilding now accounts for 80 percent of the city's total.

According to economy and information committee statistics, the manufacturing sector grew rapidly in the past five years. The output value of petrochemical industries in 2010 is expected to be 3.7 times that of 2005, a 29.8 percent increase year-on-year.

The motor sector's output will be worth 6.3 times what it was in 2005, a 44.5 percent increase year-on-year. Shipbuilding will generate 3.6 times the value as it did in 2005, a 29 percent year-on-year increase.

In the past five years, 14 Qingdao enterprises have been recognized as national innovators, the most for any city at the same level.

Innovation has made Haier one of the most valued brands and a leader in home appliances in China. It produces nearly 100 types of products.

A digital video chip invented by the Hisense Group broke the foreign monopoly on that technology, and gave China its first video chip protected by intellectual property rights.

During the 2006-2010 period, Qingdao built 12 industrial bases for software, integrated circuits, new materials, and high speed trains. By the end of 2010, they are expected to be driving the city's high-tech development.

This sector will generate 535 billion yuan in output value by then, an increase of 22.8 percent over the same period of last year, and a whopping 180 percent increase over 2005, at the end of the 10th Five-Year Plan.

The rapid development of modern equipment manufacturing has brought a number of new, advanced products.

The CSR Qingdao Sifang Locomotive and Rolling Stock Co has trains that go 200kmh, 250kmh and 350kmh, putting Qingdao at the heart of China's high-speed train development.

Qingdao has also become China's largest builder of ships, refrigerators, and light helicopters. Its shipbuilding amounts to 2 million deadweight tons (DWT) annually. This is expected to reach 4.7 million DWT in the near future.

High-tech industries are fueling Qingdao's economic growth. Last year, their output value accounted for 46.51 percent of the city's total.