Asian tiger on the prowl

The Pudong skyline has emerged in 10 years

The city skyscape of Shanghai is an awesome sight.

Hundreds of high rise offices in space age shapes and sizes reach into the sky.

It's even more astonishing to think that most of them have been built in just 10 years.

The regeneration of China's biggest city dwarfs anything in Britain.

Most of the redevelopment projects I've seen could fit into the car park of just one of the new skyscrapers.

The building never stops

Much of the work has gone on in Pudong, across the Huangpo river from central Shanghai.

Once just farmland and marshes it's now a very modern metropolis, home to huge factories, offices, hotels and even a B&Q store.

The city has gone from a third world to a first world economy in just a decade.

It's a transformation that has been spurred on by a powerful combination of politics and economics.

The politics come from the Chinese government which has chosen Shanghai as its model for westernising.

Colonial

The grand colonial buildings along the Bund, Shanghai's waterfront, are evidence that city was the first in China to open to foreign trade.

Now it's seen as the ideal base for a new era of trade with the west.

The government, which includes several former mayors of Shanghai among its elite, wants the city to overtake Hong Kong as a commercial and financial centre.

A model showing Shanghai in 2020

It offers huge incentives for companies to move into areas like Pudong.

The economics are simple. Now that China has signed up to the World Trade Organisation, western companies are finding it easier to move in.

A cheap, well educated labour force and a market of more than a billion people have proved irresistible attractions.

The giant Sharp plant in Pudong is a perfect example. The factory is a joint venture between the Japanese company, Sharp, and a Chinese state-run enterprise.

It employs 3,000 people in a state of the art factory. It turns out 3m white goods like fridges and microwaves every year and has plans to expand still further.

Direct gateway

It's a win-win situation for everyone involved. The Chinese economy gets access to state of the art manufacturing techniques. Sharp finds itself with a low-cost workforce and a direct gateway to sell into China.

The workers themselves have seen their wages double in just a few years. That in turn gives them more money in their pockets to buy the goods being turned out in their factory.

But despite the staggering successes so far, there are grounds for caution, both in economics and in politics.

Forever Bicycles is having to diversify

More worldwide competition has made life difficult for China's antiquated state-run companies.

It's reckoned that 6m people a year are losing their jobs.

The Forever bicycle factory in Shanghai has shed 3,000 in recent years. It's desperately trying to rationalise and diversify into new products.

Also, as we know only too well in Britain, gleaming new factories can be closed down and moved elsewhere just as quickly as they can be built.

For now everyone is moving to China. But wages are already starting to rise in the Shanghai area.

Foreign companies are moving further into the country in their relentless search for the cheapest production costs.

Global search

But it's a global search and already companies are beginning to look elsewhere in the region.

The UK bicycle company Raleigh is closing its famous factory in Nottingham and having its bikes made in Asia.

But the firm, which initially looked at China as a source is now turning its eyes elsewhere, to countries like Vietnam.

Yet there is no sign of doubt in Shanghai and little time to pause for thought or breath. The construction carries on apace.

A new Maglev rail link from Pudong airport into the city centre is nearing completion.

The economic changes are also affecting the social structure of Shanghai.

Bulldozing

The bulldozing of old homes to make way for offices continues. The displaced residents are being encouraged to buy their own apartments - a few years ago that would have been an unthinkable development for a communist country.

China's rigorously enforced policy of one child per family means there is an ageing population.

That will inevitably lead to a drain on pensions and health services. The government is persuading more people to provide for their own pensions and health.

For now though the country's GDP is growing at 7% a year and China's gamble on a capitalist economy is paying off.

That boom is producing a quickly growing middle class, rich in consumer goods.

Aspirations

The presence of B&Q in China is the perfect symbol of the aspirations of a new generation of homeowners.

In the west, the growth of the middle class has historically been linked with the growth of democracy.

Shanghai's bourgeoisie now have their own homes, and their own mortgages and most of them are saving to buy a car.

The bigger stake people have in the economy the greater is their demand for a say in how it's run.

In letting capitalism into the country, the Chinese government may have unleashed a tiger which it will find difficult to control.