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New Shanghai

by Pamela Yatsko
The rocky rebirth of China’s legendary city
298 pp Wiley Paperback £14.50
0471 479152

Shanghai, perched on the southern coast of China, is known as one of the world’s largest cities. But until recently, it was also known as one of the sleepiest, a far cry from the laissez-faire energy of its colonial past. Then, in the early 1990’s, the Chinese government decided that Shanghai would be developed into a world-class financial and commercial centre, a city capable of leading China into the new millennium. The recipe seemed simple enough. Take plenty of money and 20 million people, and mix until skyscrapers form. Add generous amounts of hyperbole, a lot of mobile phones and a stock market. And – there you have it.

In certain respects, Shanghai looks like a financial centre. There are certainly plenty of skyscrapers; at one time the city contained one-fifth of the world’s construction cranes. The planners looked at Hong Kong, London and New York, and concluded that glass towers were the defining trait of a successful market economy. They simply failed to understand the difference between the outward symbols of capitalism and the social underpinnings of it. In essence, this is the difference between hardware and software. The government focused on new buildings and new roads, even while the software of prosperity – a reliable legal regime, openness to new ideas, freedom to innovate – languished. A key problem was that, during the Communist era in Shanghai, any trace of capitalist ability had been obliterated. If anything, the city administrators retained a traditional Maoist leaning well into the 1990’s, with a strong emphasis on government control. They made the mistake of believing that innovation could be planned. The result was mainly confusion. At the factory level, most managers interpreted the new direction as permission for them personally to make as much money as possible, causing an epidemic of corruption that shows no sign of abating.

In some ways, too, the city’s vast size is also a problem. One can make a great deal of money without having to look beyond the city borders. The executives of foreign companies who poured into the city ten years ago have also become deeply dissatisfied, and now tend to focus on the local market. Those who are looking for a national base have moved to Beijing.

But Shanghai’s substantial industrial base and strategic position as a gateway to the interior of southern China make it a logical centre for manufacturing and trade. It may one day even become the regional financial centre it is supposed to be.

From the Times Literary Supplement

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