SHANGHAI'S gross domestic product expanded 8.3 percent during the first three quarters of 2011, a slowdown as the city focused on quality rather than quantity of economic growth, Mayor Han Zheng said yesterday.
The city's growth was 8.4 percent in the second quarter, and 8.5 percent in the first three months. A separate third-quarter figure was not given. The city's economy expanded 9.9 percent in 2010.
"We are keen to improve economic structure and build an economy with higher efficiency," Han told a press conference of the 23rd International Business Leaders' Advisory Council for the Mayor of Shanghai meeting in the World Expo Center.
"Shanghai has to make breakthroughs in pushing forward economic restructuring in pursuit of a sustainable growth," he said. "The economic data of the first three quarters already showed positive signs for Shanghai with a new growth model."
The tertiary industry showed solid growth in the first nine months to lead the city's performance, as high-end services like financing, shipping and international trade expanded aggressively.
Manufacturing also improved, with electronics, auto, and pharmaceuticals taking a leading role.
"We think the pace, structure, and quality of the economy in the first three quarters are all showing a healthy and stable growth," Han said. "We think it's on the right approach of growth."
The housing market is also cooling down amid a strict implementation of the central government's curbs on the market. Han pledged a continued firm hand to follow the central government's tight policy on housing.
In 2005, the real estate sector accounted for more than 15 percent of the city's economy. In the first three quarters of this year, the contribution has been cut almost in half - to less than 8 percent.
The housing market has been stagnant in the recent quarter.
"We are optimistic about Shanghai's growth in 2012," Han said.
The city will finalize its targets for 2012 in December.
Meanwhile, the city is also working with the Ministry of Finance and the State Administration of Taxation in drafting implementation guidelines on the coming trial of a value-added tax reform in the city in 2012. The guidelines will be posted soon, Han said.
"The new VAT reform aims to cut the tax burden to the services industry," he said.
The State Council said last week that China will start to lower corporate taxes in selected service industries next year under a trial scheme in Shanghai as the government acts to support companies saddled by rising costs and slowing growth.
Transportation and some service companies in Shanghai will have their business tax replaced by a value-added tax, a majority of which is deductible, starting January 1. The idea is to eventually expand the program to the whole nation. China will also introduce two lower-rate VAT categories - 11 percent and 6 percent - in addition to the existing VAT brackets of 17 percent and 13 percent.
Unlike the business tax, which is charged on a company's revenue regardless of its costs, a firm can deduct such as expenses as fuel and equipment under the new VAT. A large number of service enterprises now operating on high costs do not enjoy the benefits of VAT.
At the IBLAC meeting yesterday, Han said Shanghai is striving to grow its market mechanism through innovations and will open to the world's business as an efficient and transparent city.
"The Shanghai government will improve the market system and endeavor to offer a first-class environment to serve the market," Han said.
Shanghai is already home to the country's major stock market and is the site of China's sole exchange for bonds, currency, gold and financial derivatives.
The city aims to build up the Shanghai Stock Exchange as one of the world's top three bourses measured by market value and volume by 2015. Currently, the bourse is the world's third largest in volume and the sixth biggest in market value.