| Shanghai: divided by a river | ||||||
I’m sitting on the 86th floor of the world’s tallest hotel and its third-highest building, sipping a $5 bottle of Tsingtao beer, and I don’t feel welcome. Even though I’m a guest, the waiting staff have glanced with obvious disapproval at my jeans and at the fake designer polo shirt I picked up for next to nothing in Beijing, and frogmarched me towards an uncomfortable high-backed stool in a quiet and poorly lit corner of the bar.
Appropriately enough, I’ve been shanghaied.
Still, from here I can still look down on the giant city sprawled below. Between here and the Huangpu River are the fringes of Pudong, the financial centre that has sprouted out of paddy Welds in the past decade. It makes Central in Hong Kong look positively third world. On this side of the river, the most immediately visible symbol of progress – if you can call it that – is the 468-metre Oriental Pearl Building, which is the tallest TV tower in Asia. Beyond the river are the illuminations of Shanghai’s famous Bund, and behind that the jumbled lights of a city of 13 million people, and – it seems – nearly as many construction company cranes.
It’s an oversimplification to say that modern Shanghai is a city divided by a river. There are, after all, skyscrapers aplenty on the “old” side of the metropolis. But Pudong, with its new airport, its stock exchange and its hotels where you need a diploma in astrophysics to operate the bedroom lights, is clearly where China sees its future. Those with offices on the historic Bund say that over the past two years they have watched in bewilderment as the landscape on the other side of the Huangpu has transformed itself.
Many taxi drivers on the Bund, meanwhile, will shake their heads apologetically when asked to drive over to Pudong, almost as though they have a fear of gravitating to the other side.
Surely none of this is quite what China had in mind in May 1949, when the People’s Liberation Army marched into Shanghai to, well, liberate the people from the corruption, cronyism and social inequality of Chiang Kai-shek’s Nationalist government? When the communists kicked out the Guomindang just over 50 years ago, their stated intention was to do away with three evils: the gulf between rich and poor, the private sector and prostitution.
The fact that all three are infinitely more in evidence in China today than they were in 1950 suggests that Shanghai, paradoxically, stands out as a shrine to the monumental socioeconomic failure of communism. As The People’s Daily reported in July, fewer than 5% of China’s wealthiest individuals hold almost half of the country’s savings deposits, worth more than Rmb6 trillion ($720 billion). You can bet your bottom dollar that a goodly proportion of those 5% live in or around Shanghai, a city now home to untold numbers of millionaires. And as for the PLA’s third target, it’s reckoned Shanghai now has more prostitutes than any other city in the world.
For those with a deeper sense of history, the emergence of Pudong as a symbol of 21st-century capitalism in all its glory does not represent much more than a return to Shanghai’s historical roots. Shanghai’s citizens have always been an entrepreneurial lot compared with other Chinese. It is no coincidence that China’s two most prominent reformers, president Jiang Zemin and premier Zhu Rongji, are both former mayors of the city.
Whether or not Shanghai’s entrepreneurial spirit will be enough to develop a financial centre equipped to challenge Hong Kong over the next 30 years remains to be seen. Many analysts doubt it, and say that in a country that offiicially outlaws gambling, Shanghai is taking an ambitious punt on its future development, and on the willingness of investors and tourists to descend in their millions. The most visible evidence of this gamble is in the frenetic construction work in Pudong, which some think may yet end in tears.
In his 1998 book on the country’s banking system, China’s Unfinished Economic Revolution, Nicholas Lardy points out that by this year the total amount of office space in Shanghai – almost all built in the 1990s – was expected to match the entire stock in Hong Kong, which was built over a more sedate period of four decades. Granted, building work in Pudong has slowed in the past couple of years. Nevertheless, Lardy may have a point when he warns about the longer-term impact of the Pudong building binge. “In retrospect,” he points out, “the repeated boast of Shanghai’s mayor that one-Fifth of the world’s construction cranes were at work in Shanghai should have been seen as a premonition of overbuilding and a coming collapse of property prices, rather than an auspicious sign reflecting the city’s economic resurgence following the creation of the Pudong Development Area in 1991.”
When you ask Shanghai-based analysts what the GDP of the region is, they tell you that such things are seldom calculated. However, a common guesstimate is that Shanghai accounts for a sixth of China’s GDP of $1 trillion, which would suggest around $167 billion – close to Hong Kong’s GDP of $155 billion. The difference is that Shanghai has nearly twice Hong Kong’s 6.9 million population, meaning that GDP per capita in the Chinese metropolis is almost half.
Those who argue that figures such as these point to a ludicrous level of over-investment can also cite one million square feet of empty office space in Shanghai and the fact that monthly rentals for the best properties have nose-dived from $90 a square metre in 1995 to as low as $10 earlier this year.
Then again, perhaps China in general and Shanghai in particular will confound the sceptics. After all, it has done so consistently for the past decade or so. The Tiananmen Square demonstrations were supposed to lead to the plug being pulled on reform indefinitely. It didn’t happen. The Hong Kong handover in 1997 was supposed to have precipitated a mass exodus from what is now China’s Special Autonomous Region and a terminal collapse of confidence. That hasn’t happened either. The Asian crisis was supposed to spark a devaluation of the renminbi and an unsustainable rise in foreign currency debt-servicing charge – another non-event.
So maybe 30 or 40 years from now the glitterati of the city will sit sipping champagne on the 96th floor of the Shanghai World Financial Centre (if it is ever completed) and look back, in amused retrospection, at the doubts expressed by ignorant outsiders during the early days of the city’s economic rebirth.
