Shanghai economy on route to 5 percent target

Shanghai's economy grew 5.1 percent from a year earlier in the first half, sustaining the same momentum as the first quarter to stay on route of the 5 percent target set for the year, the Shanghai Statistics Bureau said on Friday.

The city's gross domestic product amounted to 2.62 trillion yuan (US$366 billion) in the first six months, with the growth led by the service sector which rose 5.4 percent, while the manufacturing sector was up 3.9 percent and the agricultural sector up 1.9 percent.

"Shanghai has achieved a stable economic development, with new industries becoming major driving forces of the high-quality growth," the bureau said in a statement.

The city's industrial output increased 5.6 percent in the first half, 2.1 percentage points faster than that in the first quarter. It was bolstered by the sectors such as artificial intelligence that jumped 12.3 percent and integrated circuits with an 11.7 percent rise in production.

Retail sales in the city advanced 1.7 percent during the period, reversing the decline of 1.1 percent in the first three months, partly thanks to trade-in programs that stimulated sales of big-ticket products such as furniture and household appliances, which surged 18.8 percent and 18.7 percent, respectively.

"The performance is better than expected, but we have to be on guard against headwinds of external uncertainties like tariff issues, which may erode people's confidence in consumption," said Xu Guoxiang, a professor at the Shanghai University of Finance and Economics.

The university's quarterly Index of Shanghai Consumer Sentiment decreased 6 points from the previous three months to 105.4 in the second quarter, reflecting renewed concerns over consumption, although a reading above100 still indicates optimism. The Index of Shanghai Investor Sentiment also lost 6.8 points to 100.5 in the second quarter.

"The city has made a lot of efforts, so we are not caught off guard," Xu said. "What we can do is to make policies more targeted and increase local consumption to reduce reliance on trade."

Shanghai's trade edged up 2.4 percent between January and June, among which exports increased 11.1 percent due to frontloading effects while imports decreased 3.6 percent.

Fixed-asset investment in Shanghai still grew 6.2 percent during the period, with most funds flowing into the manufacturing sector which saw an investment hike of 19.8 percent. The investment in property development rose 3.8 percent and sales of commercial housing increased 1.6 percent, up from 0.8 percent in the first quarter.