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Last Updated: Monday, 7 May 2007, 23:30 GMT 00:30 UK
Shanghai: Creating a global city
By Steve Schifferes
Globalisation reporter, BBC News, Shanghai, China

The new Shanghai often overshadows the old
The new Shanghai often overshadows the old

Shanghai is the ultimate poster-child for the effects of globalisation on cities and regions.

China's largest city languished for 30 years as the Chinese economy was closed to outside influence, and the country went through the political turmoil of the cultural revolution.

All this was dramatically changed when the country opened up its markets to the West in the 1980s, and Shanghai was given the green light to "get rich".

In the last 15 years, the city has been transformed into a glittering metropolis of 21 million people, with more skyscrapers than New York and a public transport system that will soon overtake London's in size.

The city has tripled in size and its influence now extends throughout the whole Yangtze Delta region, the richest area in China.

But it is not just the size and speed of its transformation, but also its glittering economic achievements, that have grabbed the attention of the world.

The Shanghai region, including the two adjoining provinces, accounts for 30% of China's foreign exports and attracts 25% of all foreign investment into the country, while 20% of its manufacturing output is produced here.

The GDP, or gross domestic product, of the Shanghai region alone is $450bn (225bn), equivalent to half the size of the entire economy of India.

More than 500 multinational companies, ranging from General Motors to Volkswagen, have their regional corporate headquarters in Shanghai.

Old Shanghai has been rapidly eclipsed by the global city
Old Shanghai has been rapidly eclipsed by the global city

And it has become one of the leading financial sectors in East Asia, with major Western banks flocking to its new financial centre, built from scratch in the new district of Pudong.

Each year, more foreign investment flows into Shanghai alone than to any other developing country. Again, this is twice the amount invested in the whole of India.

And the rate of economic growth has been phenomenal, with Shanghai's economy growing at a rate of 12% per year, much faster than China as a whole.

By 2020, Shanghai's economy is expected to have expanded five-fold, making it bigger than New York in 1997, the richest economic region in the world.

Consumer and property boom

The rapid economic growth has also transformed the economic prospects of individuals.

Luxury goods and shopping malls now dot the landscape
Luxury goods and shopping malls now dot the landscape
Per capita income rose from $125 per year in the 1950s, and $1,000 per year in 1977, to $3,000 in 1997 and $6,000 in 2005.

The growing urban middle-class also fuelled a consumer boom and a property boom in the city.

Western shops dominate the pedestrianised shopping street of Nanjing Lu, while the more elegant shops of the former French concession include the world's busiest H&M women's clothing store.

And fancy restaurants by famous chefs now line the Bund, the curving waterfront that was the financial centre of Shanghai in the 1930s.

Dislocations

The growth of Shanghai has been accompanied by vast human dislocations.

Shanghai shoppers enjoy access to Western fashion
Shanghai shoppers enjoy access to Western fashion
More than one million households have been displaced to flats on the outskirts of the city in order to make way for the massive developments in the centre.

And almost four million migrant labourers have flooded into Shanghai from rural areas in the past 20 years to take advantage of the economic opportunities. They now make up one in four of the workforce.

These migrants have lacked any legal rights to health or education, and have suffered much poorer living conditions than native residents.

Even for local residents, the high property prices are forcing people out of the centre, making many postpone marriage and family life.

Ambitious Future

The city government of Shanghai is nothing if not ambitious.

Map of Shanghai

To ensure Shanghai dominates foreign trade, it is building the world's largest container port on an island 30km offshore, linked by a six-lane bridge.

It also has bold plans to decentralise development by creating nine new towns around Shanghai, each with 500,000 residents.

And it plans to increase the use of public transport, raise education levels and encourage internet usage among its residents.

And just as Beijing used the 2008 Olympics to focus on its development, Shanghai plans to focus its World Expo 2010, which is expected to bring 70 million visitors to the city - on the redevelopment of the riverfront.

But the biggest obstacle to Shanghai's future development may be political.

Just as Shanghai's takeoff to growth was stimulated when Shanghai mayor Jiang Zemin took power in the 1990s, the new leadership of the Chinese Communist Party is attempting to curb its wings.

In October, the party secretary for Shanghai, Chen Liangyu, was arrested on corruption charges and was only replaced in March by an outsider, Xi Jinping.

Analysts believe that the move was intended to curb Shanghai's power, and was also related to the policy of the new party leadership to shift development from the rich coastal regions further inland, in order to narrow income disparities.

But Shanghai, with its entrepreneurial tradition and focus on getting rich, has always bounced back. This time, chances are it will do more than just that.



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