Shanghai needs more developed private economy to strengthen competitiveness

Shanghai is called for enhancing the development of private companies to boost competitiveness, experts said today at the Pujiang Innovation Forum 2017.

Shanghai is called for enhancing the development of private companies to boost competitiveness, experts said today at the Pujiang Innovation Forum 2017.

The city has already ranked second in Asia on private equity investment, given such investment per capita in Shanghai totaled US$935 last year, only trailing Beijing’s US$1,323, according to the Asia and Pacific Knowledge Competitiveness Index released on the forum. Private equity is capital invested in private companies.

“But more efforts are expected in the private sector to bolster Shanghai’s ambition of being the international financial and innovation hub,” said Luo Shougui, professor at the department of applied economics of Shanghai Jiao Tong University who led the index research.

Output of Shanghai’s private economy is relatively small compared with public and foreign sectors, given private economy accounted for around 24 percent of Shanghai’s gross domestic product over past five years, while public and foreign economy take up around 50 percent and 26 percent respectively, reported finance.ifeng.com, a domestic financial news portal.

Meanwhile “the enthusiasm among private equity investors in Shanghai seems weaker than Beijng and Guangdong,” said Jin Aimin, researcher at Shanghai Institute for Science of Science.

Beijing has 94 startup incubators while Guangdong province having 178 by the end of last year, dwarfing Shanghai’s 47, according to the report on the Eco-system of Science and Technology Finance in China released on the forum.

Shanghai would rank higher in competitiveness if its private companies are more developed, as they would better invigorate the economy bolstered by their faster growth and more flexible strategies, Luo said.

Shenzhen-based digital device maker Huawei invested around 60 billion yuan (US$9 billion) every year on research and development, “over half of Shanghai’s 100 billion yuan in total last year,” Luo added.

Shanghai ranks fifth in the Asia and Pacific Knowledge Competitiveness Index this year, same as last year.

The city’s financial support for innovation and high-tech industries remain one of the strongest, but measures such as attracting more private equity investment and providing more services to boost private companies’ growth would be needed in the long term, especially in the high-tech sectors, Luo said.

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