Shanghai’s Economic Transformation from Third to First World City

My wife and I first visited China in 1982, not long after its open-door policy began to attract the cautious interest and attention of the international community. In a well planned and fascinating 16-day journey, specially arranged by the Beijing international conference organisers for the overseas participants and their spouses to get to know the country better, my wife and I toured Xian, Luoyang, Nanjing, Shanghai, Suzhou, Hangzhou and Guangzhou.

We revisited Shanghai, after 14 years, and were overwhelmed and mesmerised by the incredibly rapid physical and economic transformation that had taken place in the intervening years. On the 1982 visit, my first indelible impression of the country was its awe-inspiring vastness and the sea of humanity that one encountered everywhere in the inner cities, especially in Shanghai and its capital Beijing.

Another unforgettable sight was the ubiquitous bicycle brigades there that jammed all the major thoroughfares at peak hours. They made Singapore’s rush-hour traffic jams seem like a breeze! A small number of taxis, buses, trucks, government limousines and even animal-drawn carts had to compete for the much needed road space with cyclists and pedestrians, who paid scant regard to their motorised counterparts and the latter reacted in the same way too.

Old Shanghai (Photo Credit: Wikimedia Commons)

Old Shanghai (Photo Credit: Wikimedia Commons)

A culture shock for visitors to China then was the indiscriminate spitting in public by a cross-section of the population. This was due to the traditional belief that spitting out phlegm was good for one’s health. Hence the common use of spittoons at home, in offices and in restaurants. China’s crude and often unhygienic public lavatories also came in for a good deal of adverse comment. Rationing of daily necessities, such as rice, grain, salt and cooking oil, was still in force for the local population.

A two-tier pricing system, one for Chinese and the other for tourists, was practised by most restaurants and tourist attractions. The rationale for this double standard was not unreasonable in that prices were kept artificially low for the locals because of heavy government subsidy and control to suit their low income. Life in China was austere, disciplined , the people appeared contented, well-fed and immensely proud of their country’s overall achievements without foreign help since the communist regime came into power in 1949. The attire for both sexes was neat, albeit drab and seemingly uniform, in keeping with government’s socialist policy of becoming an egalitarian society.

Public entertainment was minimal and confined mainly to Chinese operas, variety and acrobatics shows. Western style nightclub entertainment was virtually non-existent and frowned upon. A breath of fresh air was that all forms of gambling were strictly prohibited; so was tipping by foreigners which, to the Chinese, reflected the indignity of labour and out of step with the strait-laced socialist China.

With a recorded history that spans over 5,000 years, China has the longest continuous civilisation in the world. Few countries can surpass it in the richness and diversity of cultures, the numerous monuments of antiquity, its varied landscapes and warm and hospitable people. While we thoroughly enjoyed visiting the famous temples and historical relics, it was most regrettable that numerous of these bore the unmistakable scars and ravages of the Cultural Revolution (1966 – 1976). It was a period of senseless destruction of ancient monuments and religious artifacts by the fanatical “red guards”, acting in the name of the revered but aging Chairman Mao and inflamed by his notorious wife Jiang Ching and her cronies as their way to revitalise China and for their eventual control of political power. It had no parallel in Chinese history.

Many of these places of significant historic interest had, perforce, to be closed for the necessary restoration or reconstruction works to be carried out before being opened again years later for public viewing. Fortunately for posterity, the most important of these national treasures, such as the world-renowned Palace Museum collection in Beijing’s former Forbidden City and the wonderful Dunhuang Grottoes paintings and sculptures had escaped the Red Guard fury, thanks to the timely and courageous personal intervention of the then Chinese Premier Zhou Enlai and troops loyal to him. If one overlooks some minor irritations of the Chinese habits and practices which differ from ours and embrace the many positive aspects of the country, a trip to China would most certainly be a very enjoyable, enriching and perhaps even a profound cultural experience.

On our 1996 trip , I was astonished by yet another physical and economic transformation of Shanghai, the largest city in China with a then population of about 13.5 million. It was a far cry from the grey and sombre-looking metropolis that I first set eyes upon only fourteen years ago! There were major construction activities everywhere in the city areas. sleek-looking public and private vehicles, high-rise international class hotels, mega-department stores, chic restaurants and modern skyscrapers and condominiums had sprung up on sites previously occupied by dilapidated shops , over crowded residences and other eye-sore tenements. A part of the second modern international airport had been built to cater to the growing number of international visitors flocking there.

Colonial buildings on the Bund (Photo credit: Wikimedia Commons)

Colonial buildings on the Bund (Photo credit: Wikimedia Commons)

The old western-style office buildings and spacious villas for the privileged, built after Western aggression against China in the 19th Century resulting in the city being divided into International Settlements, had been artfully renovated after a long period of neglect. They certainly add to the charm and colour of Shanghai as a cosmopolitan city. Shanghai, once again, became China’s premier financial, industrial, trading and science and technology centres. It is the best place to observe China’s dynamic economic growth over such a short period of free market economy, thanks to the vision of Deng Xiaoping, the supreme ruler of China in the 1980s, whose open-door and economic reform policies revived the nation’s stagnant economy and industrial development. It also boasted the largest concentration of the nation’s intelligensia and highly trained professional and technical manpower, alongside the most astute business entrepreneurs in this vast land of one billion people.

Traditionally, Shanghai’s businessmen, which includes those from the surrounding cities such as Ningbo, have been much admired internationally for their business acumen and entrepreneurial flair. Many credit a large part of Hong Kong’s post-war prosperity to the massive injection of capital and consummate business skills by Shanghai entrepreneurs settling there after the communist takeover of China in 1949. It is no coincidence that many prominent Hong Kong billionaires and Taipans, such as K Y Pao, C Y Tung, and Run Run Shaw, were all hailed from Shanghai. By 1996, Shanghai and the nearby Southern provinces had produced more millionaire-businessmen than anywhere else in China. Most started with practically nothing under communism where all business enterprises were state owned. A typical success story was that of an eel breeder who began to farm eels commercially only in 1988 with a capital of ¥42,000 (less than US$6,000). By 1996 he was already presiding over a business empire with an annual turnover of US$150 million and operated the largest such enterprise in the world. I became sanguine that, given sustained political stability and economic expansion in China, Shanghai and the surrounding region will continue to produce successful captains of industry of the calibres of Hong Kong’s Li Ka Shing, Malaysia’s Robert Kuok, Singapore’s Lee Kong Chian and Liem Sioe Leong of Indonesia, or even exceeding them.

Shanghai is particularly noted for the former residences of famous people like Dr Sun Yat-Sen and his redoubtable wife Song Ching Ling, novelist Lu Xun and Premier Zhou Enlai. It also has a new world-class museum whose collections of ceramics, bronzes , buddhist sculptures and other art objects are of an exceptionally high quality equalled to the best elsewhere. With growing affluence, many antique shops and art markets as well as art auction houses had been set up in Shanghai and other leading Chinese cities like Beijing. Shanghai alone was reputed to have more than 100,000 art collectors of various standing. This must lead to further appreciation of the value of Chinese works of art in the near future. The same phenomenon occurred when the Japanese started to collect their own art heritage in a substantial way since its economic expansion in the 1960s. I believe firmly that there is a high correlation between the monetary value of a nation’s art objects and its economic and political fortunes.

Shanghai’s seafront promenade, better known as the Bund, is the place to view grand old colonial buildings lining the waterfront. From there one can also catch a glimpse of the city’s latest multi-billion dollar economic development showcase, the Pudong Industrial Zone, in which Singaporean businessmen alone had already invested more than US$500 million in various projects. It was a vast expanse of farm land and rice fields in the 1980s, where the second international airport now  stands.

At one end of the Bund is Huangpu park.  The insulting sign, “Chinese and dogs not allowed”, was once posted there by foreign powers in order to keep off the Chinese from having access to it. They occupied parts of Shanghai as a result of unequal treaties imposed by the Western victors on China after the infamous Opium War in 1842. This obnoxious sign had long ago been removed and is now preserved in an on-site museum as a timely reminder of China’s humiliating past.

Shanghai is perhaps the best place to sample cuisines from all parts of China.  Food prices were generally very low by Singapore standards, except in very upmarket restaurants. Our favourite restaurant is the popular Nanxiang xiaolongbao (Shanghai steamed dumplings) restaurant, the best there, standing in the middle of an artificial lake located in a busy part of town. One extravagant habit of the better off Chinese is that they would often order more than they cold consume, possibly to show off their new found wealth. A typical Chinese banquet has 12 or more courses, with a free flow of wines and liquors followed by repeated toastings.

Pudong skyline (Photo credit: Wikimedia Commons)

Pudong skyline (Photo credit: Wikimedia Commons)

One should not leave Shanghai without partaking in its nightlife. To watch a scintillating performance by the world-renowned Shanghai acrobatic performance was a relentless but pleasant assault on one’s senses; likewise, to listen to the old western-style jazz band at the venerated but somewhat rundown Peace Hotel, whose veteran members were all in their 70s and 80s, was a uniquely unforgettable experience which cannot be replicated anywhere else. Two of the notable achievements of the Chinese Government, as epitomised by Shanghai and Beijing, were the almost total eradication of the age old habit of spitting in public. Refreshingly, there were more modern and much cleaner public toilets compared with just a decade ago. However, China still has some way to go before achieving a clean-toilet culture, like in Switzerland, which has made such a deep impression on Singapore’s Prime Minister Lee Kuan Yew, the mastermind in transforming tiny Singapore into a world-renowned clean and green garden City.

My own view, admittedly somewhat speculative, is that the Chinese, like many other Asians, tend to have a strong family conscience but weaker in social and civic consciousness compared with Westerners. Consequently, while most are extremely house-proud and will keep their own toilets in a pristine condition, they seem to believe that maintaining public toilets in a civilised condition is a state responsibility.

To tour Shanghai on one’s own had become much easier and convenient than in our previous visit.  Travelling by taxi was still quite economical and the taxi drivers were generally competent, honest and could double up as tour guides for no extra charge. The public buses and subway trains too were much improved but were always crowded.

The development of Shanghai’s tourism services and infrastructure generally deserve high praise. However, there were black sheep tour operators there and elsewhere in China who regarded tourists simply as fair game and would not hesitate to fleece them for short-term gains. It is in the long term interest of the Chinese tourism industry to re-establish its previous enviable worldwide reputation of absolute candour and integrity before its opening up and economic reform policies prior to the 1980s. Hopefully, this is a transitional problem and those errant tour operators would be weeded out in due course or turn into a new leaf to meet the changing circumstances for their own future well being.

We revisited Shanghai in 2010 for the World Expo, the first in China, and to see its latest developments after our 1996 trip. We were even more awe-struck by the visible affluence of a truly world-class metropolis that greeted us upon our arrival at the huge and state of the art Pudong International Airport, one of the grandest in the world. On our taxi ride to our hotel in the newly expanded Pudong commercial and hotel belt on the east side, there were rows of impressively imposing skyscraper towers fronting and surrounding the historic 113 km Huangpu River that flows through the city. From the spacious lounge on the 87th floor of our hotel, we commanded a sweeping view of the grand old colonial buildings across the river overlooking the famous Bund and the new skyline surrounding it, which accentuates the contrasting old and new cityscapes. Once dubbed the Pearl of the Orient and Paris of the East by foreigners and the Chinese elite classes residing there in its heydays of the 1920s and 1930s, it has, once again, reclaimed this dubious accolade. Nowadays, the all-consuming drive to be rich and famous there has, once again, become so infectious a social phenomenon that it reminds me of the old saying that when one sinks roots in this decadent city, one’s soul and character would need complete cleansing to be whole again!

Early the next morning, we crossed over to the Bund on the west side by the more relaxing and cheaper ferry boat ride to savour this long and familiar old landmark which still symbolises the city. There were already groups of early risers on the promenade there. It was a refreshing sight to see so many young and old folks doing their regular morning keep fit exercises against the cool and gentle breeze. There were the brigades of vigorous joggers, those taking leisurely strolls and others practising the ancient art of taichi and qigung as well as the graceful Chinese classic fan dancers with their intricate movements. We spoke to an elderly couple and were impressed that they had been doing their taichi there for the past twenty-five years without a break, not even during the cold winter months! With a more stable life and higher standard of living, the people’s desire to grow old gracefully and healthily was clearly shown for all to see. After a leisurely long walk along the Bund, our appetites perked up and we had a delicious and economical noodles and dumplings breakfast in a crowded small cafe there like the locals do.

Shanghai had already become the most populated city in China, with a population of about 23.5 millions, which surpasses that of Taiwan. In all downtown districts, clusters of tall buildings had replaced the traditional shop houses and simple dwelling houses to meet the economic boom with the result that its total high-rise commercial and condominium structures had overtaken that of even New York city! More of these were in the pipelines and among them is the 121-storey Shanghai Tower(632m high) which will be completed in the latter part of 2014, making it the second highest structure worldwide, after Barj Khalifa in Dubai. Another sign of affluence was the proliferation of motor vehicles on the roads resulting in traffic jams daily. Owning a car was well within the reach of most middle income households and the city had more luxury brands cars than most other cities in the world. The local drivers were even more reckless than previously and the pedestrians would still cross the roads in a haphazard manner and hurriedly to avoid being hit. The city had become heavily air polluted with inadequate fume emission controls from industrial plants and motorised vehicles, making living there quite unhealthy for the residents. The authorities were working hard to find a satisfactory way out of this predicament.

Coupled with the above, in various prominent downtown areas, upmarket entertainment places and international fine-dinning restaurants had sprung up to cater for the well-heeled local residents and visitors with deep pockets. More of these will follow suit to meet the growing ranks of the new rich and lavish spenders. The city had become one of the best markets for fine Western wines and liquors within such a short time. All in all, Shanghai probably has more eating places than most big cities in the world because eating out is commonplace among the local population. Few people would entertain guests at home except the rich residing in commodious and luxurious dwellings with a number of domestic maids. In our previous visit, China had no billionaires to speak of yet but, by 2010, it had produced a growing string of world ranking billionaires, quite a few had prospered in Shanghai, with many more to augment the number in the near future as the country’s economy expands further. Also, more and more international, managerial and professional talents were flocking to this city which offered them better career prospects and rewarded them more handsomely than in their own countries. The prospects of China overtaking the US as the number one world economic power by 2030 had led to a large number of foreign students enrolling in its tertiary institutions, if not for Chinese culture’s intrinsic value then for its economic worth. Conversely, a growing number of Chinese were travelling overseas and they were most welcome as big spenders on luxury items. Consequently, China’s outbound tourist market was becoming the fastest growing in the world and would continue to expand in future. Many Chinese tourists did not endear themselves to the local residents because their social behaviour was far from admirable. Despite Shanghai’s palpable wealth, there were still many enclaves of fearsome slums inhabited by numerous poor locals and masses of migrant workers from the rural China who had gravitated to this and other big cities seeking a better life. Sadly, many had ended up being grossly exploited and paid well below market wages and having to toil for excessively punishing hours of work prohibited by the employment laws. This is not unique to Shanghai, and is true in many places elsewhere too.

The economic breakthrough of China has brought with it many potentially explosive consequences, if not tackled with determination and good governance. I would single out three of these to highlight here. The first is the deepening social divide and unequal income distribution between the richer people and those at the low-end of the scale. The income disparity has become so far apart especially between the city workers and those in the poor rural regions that, if left unresolved, could lead to large-scale unrest with potentially dire social consequences as history has shown. Another perennial problem is the widespread corrosive corruption that is so prevalent in both the public and private sectors, not least among those in high political or other public services and their family circles. The new top Chinese political leadership is determined to tackle this problem with urgency. To date, some prominent personages in both sectors had been prosecuted and convicted with more to follow. Despite this, corruption is so deeply entrenched in the Chinese culture and psyche that it would take a long time to reduce it to a less threatening proportion than the present time. To achieve this, the top government leaders must themselves be incorruptible at all times and under all circumstances in order to inspire others to follow suit. Only time will determine the outcome of this massive problem. Finally, the desire to be rich seems to know no bounds that some business enterprises, even a few reputable ones, would, to further enrich themselves, resort to criminal means of adulterating their products by mixing them with cheaper or even unsafe ingredients which had led to serious health risks and deaths of consumers. The contaminated infant powered milk products which killed many babies all over the country was an ugly case in point.

Shanghai Transrapid (Photo credit: Wikimedia Commons)

Shanghai Transrapid (Photo credit: Wikimedia Commons)

On the credit side, the city had already scored many firsts in its resounding successes in several fronts of human endeavours over such a short span of time. Among these notable achievements were:

  • In 2011, Shanghai overtook Singapore as the number one port in the world in cargo tonnage handled.
  • It had strengthened its leading position as the financial, commercial and trading hub of China and grown into a world-class city.
  • The Shanghai Stock Exchange became one of the leading ones worldwide alongside that of New York, London and Tokyo.
  • It became the largest city in the world with a population of 23.5 million in a land area of 2448 sq m.
  • It had one of the highest per capital incomes in China.
  • The first High Speed Rail, which was first tested in Shanghai in 2007 with a speed of 200 km per hour, had by 2011 greatly reduced the travel time from Shanghai to Beijing to well under 6 hours.
  • The Shanghai World Expo 2010 was the largest and most spectacular to date, with 200 counties participating.

On the lighter side, The World Expo turned out to be a great disappointment for me and my family members. Despite the advice from our hotel staff to go there on a week day after 5 pm to avoid over crowding, when we arrived there we were facing long queues at all the most popular country pavilions, especially China’s, which would take between two and three hours for us to get into just one of them. Not prepared to join such a prolonged wait, we ended up seeing only three lesser ones of Singapore, Cambodia and New Zealand, the latter being the most enjoyable of the three, in the three hours that we spent there. We ended our evening’s adventure by having a slap-dash dinner at a packed fast food stand to pacify our hunger pangs. For the record, the majority of those who came to this six-month long world fair were from all over the host nation, and the much smaller number of 2.8 millions came from overseas countries. It was yet another clear indicator of the growing wealth of Shanghai and China as billions of US dollars were expended to stage this extravagant show, which would no doubt project its international image favourably. I estimate that a Chinese family of three would probably be incurring at least US$120 for food, tickets and souvenirs to enjoy this fair, and much more for the numerous Chinese visitors from outside of Shanghai.

I left Shanghai more than convinced that this international city will continue to lead the country into an even more prosperous economic future. Hopefully, it will not be at the cost of abandoning many of China’s traditional morality and virtues which have withstood the test of time.

Lam Pin Foo

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