To its benefit -- and detriment -- Shanghai has reached the pinnacle of success
as a market economy in less than three decades.

Shanghai Paradox

Peter Kwong

Agence Global
January 12, 2007

SHANGHAI -- When in 1980 I started returning to Shanghai -- the city where I had attended elementary school as a child -- my relatives had to use ration coupons to purchase meager quantities of meat and cooking oil. I helped them buy bicycles with my foreign exchange certificates at the Friendship Store, which catered only to foreign visitors and overseas Chinese, because they would have otherwise had to wait for six months to obtain sufficient coupons and pay half a year’s salary to get one. The French-designed eleven-story art déco luxury Jinjiang Hotel where I lived towered over the French Quarter.  It was impossible to imagine what the city would become twenty-six years later.

The elegant Jinjiang structure is today dwarfed by the surrounding office and condominium skyscrapers, most of them over twenty stories high. City residents shop at foreign-owned supermarkets found at most major street intersections that are supplied just as well as their Hong Kong or U.S. equivalents. Most of the consumer goods sold in the world today are in fact produced right here in Shanghai. Buick sedans have replaced bicycles as the most coveted transportation in China. As of 2005, more are sold in China than in the United States. They are manufactured at the Shanghai General Motors plant.

These remarkable changes, however, pale next to the even more astonishing transformation of the Chinese Communist Party ideology. Right around 1980 the party leadership admitted that three decades of its rigid programs produced little economic gain and that the people were tired of the constant political upheaval. Subsequently, it engineered a 180-degree turn to a market economy, encouraging people to get rich fast instead of striving for equality.

The initial experiment was carried out at Shenzhen, a town across the border from Hong Kong, because the party did not trust that it could keep the notoriously capitalistic minded Shanghaiese under control. It was only in 1991, in the aftermath of the June Fourth Massacre, when the communist leadership desperately needed to appease popular discontent, that it finally “opened” Shanghai. Once let loose, the Shanghaiese wasted no time.

The Shanghaiese, whether rich or poor, have always believed themselves to be more rational and efficient than people from the rest of China. They’ve always reproached the Beijingnese for wasting time talking about politics, while they themselves get things done.  They are especially proud of their trademark way of doing things the grand haipai style. True to the haipai tradition, the city offered generous incentives to attract foreign business investment: cheap office space, low taxes and, most of all, the promise to cut red tape to facilitate transactions. Foreign firms rushed to Shanghai to establish their presence. In a short fifteen years, the city rebounded to overtake Shenzhen and the Pearl River delta as China’s major industrial and consumer goods production center. By the end of 2007, in terms of the value of the IPOs traded at the stock exchange, Shanghai will surpass Hong Kong -- the world’s number one market in 2006.

In the headlong rush to join the ranks of world-class metropolises, Shanghai’s communist leaders have evicted tens of thousands of families and razed block after block of charming old dwellings built in the style unique to Shanghai, so that foreign developers could erect nondescript high-rise office complexes, hotels and apartment buildings that would look equally appalling in Paris or New York. The intended awe-invoking effect of the showcase skyline of the Pudong financial district designed by renowned Italian, Japanese, Spanish and American architects across the Huangpu River from the old Bund is, unfortunately, usually lost in dense layers of smog. More visible is the new affluent lifestyle, reminiscent of that enjoyed by the select group of foreigners, gangsters and corrupt government officials and supported by an invisible sea of servants, handlers, singsong girls and coolies during Shanghai’s glory days of the1930s. Today, as then, members of the moneyed elite -- foreign businessmen, overseas Chinese investors and high party officials -- reside in the best part of the old French Quarter, shop at international brand-name stores, frequent health spas in five-star hotels, and wine and dine in clubs with initiation fees as high as US$10,000 where a glass of wine costs a minimum of US$10. 

For average residents, including members of the growing middle class -- as proud of Shanghai’s sophistication as they may be -- this lifestyle is but a pipedream. A college professor who earns a respectable US $650 a month must pare down daily expenses in order to pay off a US$100,000 mortgage for an apartment of merely 500 sq. ft. Forced to spend US$5,000 a year for his son’s college tuition, he’s left with nothing for healthcare emergencies.  Much worse off are the city’s 3 million migrant workers (out of a population of 20 million), forced by poverty into jobs reminiscent of their service-providing predecessors escaping the civil war before 1949.

Despite such glaring social differences, it would be hard to find a Shanghai resident who hankers for the rigid communist past. The life here has truly improved in a dramatic way. What is outrageous is that the communist party officials, who are supposed to be safeguarding the interests of the people against capitalist plunder, are enriching themselves by accepting bribes from the very people they should be guarding against. The former party secretary of Shanghai and member of China’s Politburo, Chen Liangyu, has recently been accused, among other crimes, of getting kickbacks for diverting workers’ pension funds to private housing developments. Ironically, Shanghai’s growing inequality is being fostered by the communist party, which had come to power precisely by promising to rid China of corruption and social injustice best embodied by the pre-revolutionary Shanghai of my childhood.

Peter Kwong, a professor of Asian American studies at Hunter College, is co-author of Chinese America: The Untold Story of America's Oldest New Community.

Copyright © 2007 Peter Kwong

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 Released: 12 January 2007
 Word Count: 946

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Advisory Release: 12 January 2007
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