2013 Briefing on Shanghai’s Commerce and Investment Zhang Xinsheng Party Secretary and Vice Chairman of Shanghai Municipal Commission of Commerce

Ⅰ Shanghai’s commercial development in 2012 In 2012, under the strong leadership of Shanghai Party Committee and Municipal People’s Government, with concerted efforts from foreign agencies and MNCs in Shanghai, the business sector well accomplished all the tasks designated for development and injected new vigor into Shanghai’s development through transformation. Establish a big platform Serve a huge market Promote opening- up Optimize overall environment

Last year, Shanghai’s commercial sector enjoyed steady development Structural adjustment continued to speed up The economy was further driven by consumption Merchandise sales Social consumer goods sales Total volume:5.4 trillion RMB Up by 16.8% year on year Total volume:738.7 billion RMB Up by 9% year on year The commercial added value took up bigger share in Shanghai’s GDP, boosting economic growth.

30% 24% As share of national total As share of Shanghai’s total Last year, Shanghai’s commercial sector enjoyed steady development Structural adjustment continued to speed up Structure of foreign trade continued to be optimized The import and export of trade in services realized 148 billion USD, up by around 15% year on year. Trade in goods decreased by 0.2% year on year, where import grew faster than export, general trade faster than processing trade.

According to statistics by Ministry of Commerce and several provinces and municipalities, paid-in capital nationwide was down by 3.7% year on year, while shanghai was 24.2 percentage point higher than national level, with growth rate faster than any provinces and cities in East China. Last year, Shanghai’s commercial sector enjoyed steady development Structural adjustment continued to speed up billion USD, up by 11.1% year on year Contractual foreign capital Paid-in capital Foreign capital absorption hit a record high billion USD, up by 20.5% year on year Foreign investment in the tertiary, second and first industry accounted for 83.5%, 16.4% and 0.1% of paid-in capital, respectively. Service industry enjoyed the largest share.

Annual FID totaled at 3.24 billion USD up by 22% year on year 1 Private enterprises made active investment merger and acquisition witnessed an increase. 2 Newly signed foreign contracted projects stood at billion USD. 3 Foreign economic cooperation was proactively promoted Last year, Shanghai’s commercial sector enjoyed steady development Structural adjustment continued to speed up

Over the past year, new progress was made in critical business sector The main body of national exhibition complex in Hongqiao business district came into operation smoothly. The 1 st China (Shanghai) International Technology Fair, approved by the State Council, will be held from May 8 th to 11 th this year. Further promote comprehensive pilot projects in modern service sector. Focusing on urban consolidation system, modern business area and public platform of international trade center, the first batch of pilot projects went on well with paid-in investment 4.76 billion RMB. An array of forward-looking and strategic projects and economic platform covering different industries and departments emerged. Modern business districts and commodity trading platform developed faster. Shanghai gained deeper pricing influence and larger say in market. (e.g. deformed steel bar swap contract, with price index by Mysteel as benchmark, got listed in NYMEX) Exhibition Public Platform Trade The exemplary and influential role of the platform further manifest

Over the past year, new progress was made in critical business sector The number and energy level of regional headquarter of MNCs was further enhanced By now, Shanghai hosts 265 holding companies 25 holding companies newly established 50 regional headquarters of MNCs 17 R & D centers newly set up 403 regional headquarters of MNCs 351 R & D centers Policies on regional headquarters of MNCs were improved. Measures, such as Implementation Recommendation on the Regulation of Encouraging MNCs to Establish Regional Headquarters in Shanghai, Recommendations on Encouraging FIEs to Establish R & D Centers in Shanghai, were amended and issued.

Over the past year, new progress was made in critical business sector More fields were opened-up and methods were improved New progresses achieved in opening-up of service industry Pudong New Area as one of the first pilot areas for commercial factoring projects in China Innovation in investment promotion More utilization of foreign capital in Strategic and emerging industries

Over the past year, new progress was made in critical business sector Overall environment for commercial development were further optimized

Ⅱ V ision for business development in 2013 Merchandise sales grows by about 15% in volume, consumer goods sales grows by about 8%. The scale of trade in goods will be stabilized, while volume of trade in services will be up by around 12%. Utilization of foreign capital will keep growth momentum with upgraded quality, added by around 35 regional headquarter of MNCs. Outbound investment increases by 10%.

ⅰ. With implementation of Rules on Promoting the Construction of International Trade Center in Shanghai, dedicated efforts will be made to transform Shanghai into an International Trade Center

ⅱ. With optimizing structure, exploring depth and facilitating benefit as focus, endeavor will be made to cultivate new advantages of open economy Proactively participate in strategic and prospective researches on deepening opening up under the new circumstances Improve related policies on supporting Asia Pacific headquarter of MNCs Encourage Chinese enterprises to go global Take proactive action Enhance strength and effectiveness of holding and participating exhibitions overseas, facilitate investment in self-owned brands and R & D Increase comprehensive advantages of foreign capital utilization, improve overall benefit Strengthen capacity of transnational operation, encourage investment, M & A overseas so as to upgrade foreign contracted engineering projects and labor service cooperation Pursue innovation- driven growth

ⅲ. With emphasis on boosting domestic demand and consumption as so to benefit the people, efforts will be made to strengthen the role of consumption in economic growth Steadily enlarge consumer spending e.g. life services Actively promote consumption hot spots e.g. community commerce Strongly support technological innovation and application e.g. e-commerce Based on strategy of boosting domestic demand, Recommendations on Deepening Reform of Circulation System and Accelerating Development of Circulation Industry will be issued soon so as to further improve the long-term mechanism of expanding consumer demand and cultivate new growth point of consumption

ⅳ. With focus on promoting comprehensive pilot projects of modern service industry, endeavor will be made to step up the development of modern service industry Develop platform economy Develop platform headquarter companies that locate core operation of initial design and end marketing in Shanghai and that possess resources and launch e-commerce Accelerate construction of public platform e.g. China (Shanghai) International Trade Networks, China Foreign Economic Policy Research Platform Pursue innovation in emerging industries Build up urban consolidation system Promote model: place order on the internet, pick up goods in real store Promote the in-depth and unique development of International business service area e.g. wine, gold and jewelry

ⅴ. With emphasis on improving government administration and service, efforts will be made to create a competitive environment for business development Stronger support to companies More favorable business environment

Thank You