Shanghai’s economy, rocked by China’s troubled property sector and the nation’s tumbling stock market this year, has better growth prospects in 2024 when the U.S. is widely expected to begin its interest rate-cutting cycle, according to Yang Jianwen, Researcher at the Shanghai Academy of Social Sciences. “The fact that the local economy is not growing is acceptable,” he said. “What Shanghai needs to do is to stabilize business activities for now and try to grasp growth opportunities in 2024.” He added that growth opportunities lie in the expected strengthening of external demand, since the U.S. is expected to lower interest rates next year. Shanghai, which sits at the heart of manufacturing in the Yangtze River Delta, is making an all-out effort to regain the city’s status as a gateway city for foreign businesses and for capital entering China following the country’s exit from the zero-Covid strategy in the first quarter of this year.
Top city leaders, including Communist Party Secretary Chen Jining and Mayor Gong Zheng, have been leading efforts to convince global investors of Shanghai’s attractiveness and sound business environment amid mounting worries among multinational companies about China’s national security law and a decelerating economy. These officials have met dozens of global business leaders, including Tesla's Elon Musk and JP Morgan CEO Jamie Dimon, as they try to assuage fears about China’s decoupling from Western economies. “Shanghai needs to be well prepared to embrace growth opportunities next year”, Yang said, suggesting the municipality cut red tape and ease customs procedures further, to facilitate foreign and home-grown businesses. That would provide a much-needed boost to the city’s gross domestic product (GDP) which stayed nearly flat in the third quarter ending September, adding a mere 0.2% from a year ago.
The local statistics bureau does not provide stand-alone third-quarter GDP numbers, but the data is derived by comparing Shanghai’s economic output of CNY3.32 trillion from January to September and the CNY2.14 trillion figure recorded in the first-half. Between January and June, Shanghai’s economy grew 9.7% from a year ago, mainly because of a low base last year when GDP contracted by 13.7% in the second quarter due to a two-month citywide Covid-19 lockdown in April and May. For the first three quarters, the local economy expanded 6% from a year earlier. At a press conference, Mayor Gong admitted economic turbulence ahead, but said the growth target of 5.5% for the year would be achieved with the help of the government’s stepped-up efforts to draw foreign investments. Mayor Gong said more landmark deals similar to Tesla’s Megapack energy storage plant and Boston Scientific’s biotech factory were in the pipeline, which would bolster the local economy and burnish Shanghai’s image as an investment magnet, the South China Morning Post reports.
