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Shanghai: A Vision of a New Global City
In the first half of the 20th century, Shanghai was dynamic and international, far ahead of many other Chinese cities. Although Shanghai did not see the same immediate rapid development of the Pearl River Delta region after opening-up began in 1978, from the late 1980s it recaptured its role as China’s gateway to the world and the world’s entry point to China. This was the focus of Shanghai’s World Fair Expo 2010. In 2016, Mayor Yang Xiong proclaimed that Shanghai would become ‘a global city of excellence’ by 2040 and placed this at the heart of his vision. Shanghai aspires to be considered in the same category as London and New York, and while it is yet to become as international as those cities, its economy and infrastructure already promise that it will emulate and surpass its golden interwar period and become once again one of the world’s great cities.
An Overview of Shanghai
Shanghai is one of the four directly controlled municipalities of the PRC–equivalent to a province. It aspires to be a global financial centre by 2020, as directed by the State Council, and is already a transport hub, with the world’s busiest container port. Located on the Yangtze River Delta in Eastern China, Shanghai sits on the south edge of the mouth of the Yangtze, emptying its waters into the Eastern China Sea. It has a land area of 6340.5 km2 (2013). Shanghai city proper is bisected by the Huangpu River: Puxi (浦西), on the west side, is the historic centre of the city, and includes the districts of Yangpu (杨浦), Hongkou (虹口), Putuo (普陀), Changning (长宁), Xuhui (徐汇), Jing’an (静安), and Huangpu (黄浦). Pudong (浦东新区) is located on the east side and is the location of Shanghai’s rapid development, including its now famous skyline and the Lujiazui financial district. The outer districts, or suburbs, surround the city proper, including Baoshan (宝山), Minhang (闵行), Jiading (嘉定), Jinshan (金山), Songjiang (松江), Qingpu (青浦), Fengxian (奉贤), and the rural eastern part of Pudong. Chongming (崇明) lies in the north of the Shanghai Peninsula on three inhabited islands in the Yangtze estuary: Chongming (崇明岛), Changxing (长兴岛), and Hengsha (横沙岛). From 2012 to 2014, Shanghai took the third position in the ranking list of China’s Urban Transformation and Upgrading Capability for three consecutive years.
According to the Shanghai Master Plan (2016–40), the policy target for Shanghai is that it becomes a global city: a key participant in the economy of the 21st century, and a cosmopolitan centre for innovation, humanity, and ecology.1 According to the plan, the city’s population will be limited to 25 million by 2040. The total land area allocated for construction will be limited to 3,200 km2, 26 per cent of which will be residential, according to the plan. Forests and parks will occupy the rest of the city’s land to make it ecologically friendly. Forest coverage will reach 25 per cent, and each resident will have 15 m2 of public parks or green land on average by 2040. Average density of PM2.5 – hazardous fine particle air pollution – will be reduced to about 20 μg per cubic metre. By 2040 more than half of downtown residents will rely on public transport, and over 60 per cent of residents will have a subway station within 600 m of their homes.
The aim to make Shanghai a global city is in a sense a return to the past to make a new future. In the 1920s and the early 1930s, Shanghai was one of the world’s most vibrant, dynamic, and cosmopolitan cities, the ‘Pearl of the Orient’. This ended with Japanese invasion in 1937 and the turmoil and carnage of the Second World War.
Historically, Shanghai was also a migrant city, attracting a large international population as well as a significant influx of Chinese drawn to economic, social, and cultural opportunities.
The new Shanghai must also draw on this international and domestic resource if it is truly to become a global city. At the end of 2013, the city’s resident population was 24,151,500. Of this, the permanent resident population was 14,251,400 while the number of its non-native permanent, or floating, population, was 9,900,100.
Shanghai is a popular tourist destination renowned for its historical landmarks such as the Bund, City God Temple, and Yu Garden as well as the Lujiazui skyline and major museums including the Shanghai Museum and China Art Museum. In 2013, Shanghai greeted 7,574,000 international tourists; international tourism foreign exchange income was US$53.37 billion. The city received 275,000,000 domestic tourists, and domestic tourism revenue was CNY340 billion. 25 per cent of China’s non-Chinese international residents live in Shanghai, but this figure is still only 170,000.
Figure 7.1: Night View of Lujiazui, Shanghai
Although a province in its own right, Shanghai’s development as a global city, or more precisely as a global city region, is linked to the integrated development of the Yangtze River Delta, which takes in part of the key provinces of Jiangsu and Zhejiang. It is facilitated by the transportation hub in the new Hongqiao Business District with rapid rail links to cities such as Suzhou, Wuxi, Hangzhou, and Nanjing. While the new transport hub links Shanghai with its immediate hinterland, the new deepwater port opens Shanghai to the world. The city will form the Chinese character (‘water’) – in its spatial pattern of regional 水 development.
While Shanghai covers only 0.065 per cent of China’s land area, its economy constitutes 3.8 per cent of national GDP, its port carries 17.8 per cent of all container traffic, and its customs facilities deal with 19.5 per cent of all imports and exports. The Yangtze River Delta region – Jiangsu Province, Zhejiang Province, and the city of Shanghai, are connected. They have similar cultural backgrounds, economic integration, and social connections. The Yangtze River Delta covers 2.2 per cent of the country’s land area and 10.4 per cent of the whole population, creates 22.1 per cent of the country’s GDP, 24.5 per cent of fiscal revenue, and 28.5 per cent of total import and export volume. It has become one of the most developed areas of China’s economy, science and technology, and culture.
Figure 7.2: Shanghai Yangshan Deepwater Port
Since 1949, Shanghai has experienced at least three major transformations. The first transition began with the founding of modern China and was essentially domestic. In the 1930s, Shanghai was an international financial centre, a major trade centre in the Far East, and the most important industrial and commercial city in China. After 1949, Shanghai’s development was determined by the needs of the new state. Shanghai had a major responsibility for the revitalisation of the national economy and especially its industrial base. Shanghai had the best equipment, was the most productive, and was technologically advanced. At the time of the first Five-Year Plan (1953–57), one third of the country’s cotton yarn, cotton, cigarettes, and more than half of the medicines and daily necessities were provided by Shanghai.
Figure 7.3: The East China Sea Bridge Connecting Yangshan Deepwater Port
The second transition from the late 1980s began the internationalisation of Shanghai. This was signalled by the fundamental change from a planned to a market economy. Nevertheless, the 1980s was a difficult period for Shanghai, since while the opening-up and reform began in south Guangdong, the old model persisted in Shanghai. Although Shanghai’s economic growth rate increased for ten consecutive years between 1982 and 1991 it was still lower than the national average. In this period, Shanghai’s GDP grew from CNY60,000 million to CNY80,000 million.
But Shanghai’s administration could control only a small part of this – only CNY5 to 6 billion every year, a problem that persists for all China’s cities. Shanghai’s future changed in 1990 when the Party Central Committee announced the development and opening of Pudong. In 1992, the Fourteenth Party Congress report proposed to build Shanghai into an international economic, financial, and trade centre as soon as possible, to rejuvenate the Yangtze River Delta and the Yangtze River Basin. The new direction for Shanghai was properly set in motion. Shanghai was put forward for the ‘321’ industrial development policy, to put service industry into a more prominent position, and to restructure the role and location of industry – particularly heavy industry – by moving away from the centre. The new development of Pudong was to play a major role in this shift alongside the establishment of four industrial bases in the northern, southern, eastern, and western suburbs. Simultaneously, a policy of encouraging foreign capital and enterprise – multinational and high-tech – right across the municipality was declared on favourable terms, including low land rent, for the incoming companies. In the next period (1992–2007), Shanghai had 16 consecutive years of two-digit growth. The average GDP growth rate of 12.7 per cent exceeded the national equivalent by two percentage points.
The most recent transformation began in 2008 following the international financial crisis. In the short term, this constituted a blow to Shanghai’s export-driven economy, but the crisis was the catalyst for a fundamental shift in the balance of the global economy, potentially to the advantage of Shanghai. In the first instance, Shanghai’s economy suffered more than the country as a whole and the growth rate fell below the national average. Shanghai, nevertheless, had a historic opportunity on the global stage, but only if it faced up to some fundamental challenges. The impact of the international financial crisis made not only Shanghai but also China more significant in the global economy while highlighting Shanghai’s deep-seated structural contradictions. Shanghai was too dependent on land finance, had a legacy of a lack of financial control, large-scale investment, and an export-driven development model. At the same time, the crisis was an opportunity and an incentive for a radical transformation.
Challenges and Bottlenecks for a Global Shanghai
The old model became a major obstacle to Shanghai’s economic development. Shanghai could not continue to rely on incoming investment stimulated through low land rents, nor on the export of commodities, which suffered a drastic decline in the post-2008 environment.
Economic Development
A difficult problem for Shanghai is that the slowdown of the export market and the planned diffusion of heavy industry to the suburbs has been faster than the introduction of high-tech manufacturing and high-end service industries. The very structure of the old model, conducive to a traditional industrial base, inhibits the emergence of such a radically different environment. High-end service industries such as finance, logistics, culture, information, and the siting of headquarters are shackled by the existing system of tax, regulation, credit, and other legal restrictions. The incentives and mechanisms for innovation need to be improved. In addition, high-end service suffers from the imperfection of market mechanisms in which labour, land, and capital elements are segmented, leading to price distortion and a lack of cohesion in the system.
Spatial Layout
Shanghai’s urban planners have looked around the world and drawn the conclusion that urban spatial structure is one of the important factors affecting the efficiency and competitiveness of cities. Since the 1980s, due to the wide use of network technology, information technology, and modern communication technology, space in major international conurbations developed ‘multi centres’. In London, the coexistence of the City and Canary Wharf is a good example of this. The centre of Shanghai still has a more traditional, even European, feel. While this may prove to be an advantage in attracting an international population, this is outweighed by the lack of not only ‘spatial carrier support’ for the suburbs but also a wide range of other social and cultural amenities. At the moment, the suburbs are not acting as nodes of urban function for the new city. As a result, the urbanisation of the city falls short of international levels.
Public Service
The economic advance of Shanghai has not been matched by its social and cultural development. For long-term success Shanghai has to become more liveable not only for the long-term international residents but also for its existing population.
The development of public services in education, health, culture, and other areas seriously lags behind economic development. There is a huge gap between social and public cultural service supply and demand. Moreover, this imbalance is highlighted in the suburbs, which are disadvantaged in terms of social and cultural resources. The gap in education, culture, health, and other social allocation of resources between the urban and rural areas continues to increase. Finally, an ageing population further aggravates the imbalance in the allocation of social resources. An inadequate labour supply increases pressure on the balance of social security funds, pension services, medical services, community services, and other resources.
Shanghai’s government is concerned that its migrant population places an additional strain on its social provision. Yet this very population would also counterbalance the impact of an ageing population, for which Shanghai is about 20 years ahead of the rest of China.
Measures for the Transformation and Development of Shanghai
The Shanghai Municipality implements a strategic ‘innovation drive, transition and development’ to shape the new Shanghai. These subheading are the strategic policy rubric.
Three Absolute Don’ts:
- ■ Don’t act at the expense of the environment and waste resources.
- ■ Don’t accumulate social contradictions.
- ■ Don’t increase the debt to future generations.
Economic development should be based on reducing:
Four Dependences:
- ■ Reducing dependence on the heavy chemical industries.
- ■ Reducing dependence on real estate.
- ■ Reducing dependence on labour-intensive processing industry.
- ■ Reducing dependence on investment pull.
The negatives would then be replaced by positives:
Six Innovations and Six Transitions:
- ■ Innovation for the service development environment.
- ■ Accelerating the transition to a service economy.
- ■ Innovation for the high-tech industry environment.
- ■ Accelerating the transition to an innovation economy.
- ■ Innovation to expand domestic demand.
- ■ Accelerating transition to the inward pull.
- ■ Innovation for energy saving.
- ■ Speeding up a transition to a green economy.
- ■ Innovation in the mechanism of urban and rural development.
- ■ Accelerating the integration of urban and rural areas.
- ■ Innovation in the social livelihood system of the people.
- ■ Accelerating transition of sharing development.
All the above constitute a fundamental change in the conception of how Shanghai not only maintains its success in economic growth but also grows into a new position in the global division of labour. This would alleviate long-term pressure on land, other resources, and the environment. The new focus is on technology intensive industries with an emphasis on science, the information and knowledge economy, and the creative industries. In June 2015, Shanghai announced the 22 items on accelerating the construction of a global centre for science and innovation. The core concept is to solve the tough problems which hinder innovation.
Redevelopment of Yangpu District
Yangpu District is located in the northeastern part of downtown Shanghai. It hosts one-third of Shanghai’s universities including the prestigious Fudan University. These universities have existed for approximately a century. Yangpu District was the birthplace of China’s modern industry over a century ago. Yangpu District saw the first power and water plants in China. These developments have won Yangpu District a reputation as a ‘Three One-century District’. Yangpu Knowledge/Creative Zone – based around the educational hubs of Fudan and Tongji and regeneration of old industrial warehouses – is regarded as equivalent to East London. The district has made itself prominent in technological innovation thanks to the following efforts.
First, for the purpose of industry–university–research integration, the local government has endeavoured to promote the profound connection between universities, communities, and high-tech zones. Colleges, universities, and research institutes are encouraged to share facilities and resources.
Second, the local government has made efforts to attract innovation resources from both home and abroad by promoting high technology transfer and innovation resource allocation centres. Yangpu District has maintained regular communication with the San Francisco Bay Area Committee, exchanging ideas and technologies. It has built the National Technology Transfer and Trading Centre.
Third, the local government has improved the service system for entrepreneurship and innovation. It provides comfortable offices for big companies and joint office space for SMEs. Yangpu District provides customised housing solutions or house-renting subsidies for talented personnel. It offers high-end internationalised living communities that can meet the needs of high-end personnel such as executives from multinational companies.
Renewed emphasis will be placed on the service sector as an important symbol of economic growth and modernisation, in order to make Shanghai part of the global service industry. During the ‘Twelfth Five-Year’ period (2011–15), Shanghai’s per capita GDP exceeded $10,000, and as the engine of this economic growth service elements had become more important than manufacturing.
Most crucially, the city is now located at a tipping point between a key domestic economic centre and a global city. Traditional international economic centres, such as London and New York, and other metropolises, are interconnected in a global financial and value chain network. A global city, such as London, is not only a general economic centre, but also a centralised control point in the world economy. It is a major hub, and gathering place, for financial institutions and professional services companies, high-tech industry R&D and a production base for new ideas and products. In a period of global economic transition post-2008, Shanghai has the designated role of becoming a key participant in a new global economic division of labour.
The World Expo 2010 Shanghai China was held on both banks of the Huangpu River from 1 May to
Figure 7.4: Wujiaochang Area, Yangpu District, Shanghai City Sub Centre
31 October 2010. The theme of the exposition was ‘Better City – Better Life’ and signifies Shanghai’s new status in the 21st century as the ‘next great world city’. Shanghai is at the centre of the most dynamic economic region of the world, on the coast of East Asia. With the establishment of the ASEAN Free Trade Area, the Closer Economic Partnership Arrangement (CEPA), and the
World Expo 2010 Shanghai China – Showing Shanghai to the World
A key moment in Shanghai’s transition to world city was Expo 2010, explicitly designed not only to stimulate the infrastructural development of the city and its internationalisation, but also to provide a legacy of expertise and resources, such as:
- ■ land, venues, facilities and assets;
- ■ a new city brand;
- ■ better-trained personnel with operational experience;
- ■ new soft assets to correspond to the city’s hardware;
- ■ international professional talents, international business organisations, greater international competitiveness, and a new urban management mechanism.
All these are aimed at making and keeping Shanghai the ‘the international window’ of China.
implementation of cross-strait ‘three links’, East Asian cities will have an enhanced population, logistics, technology, information, and capital flows. All of this will speed up Shanghai’s city grade crossing, accelerating its transformation to an intercontinental and international economic centre. This is a historic opportunity for Shanghai.
Figure 7.5: China Pavilion at Shanghai World Expo
The economic initiatives of Shanghai enhance the city’s social development – its ‘liveability’ for international residents and existing citizens. The aim is to transform Shanghai from a ‘moderately well-off’ to a ‘harmonious’ society.
Shanghai has now reached the level of a middle-income developed economy. In the past, the service sector has been constrained by the comparatively low purchasing power of Shanghai compared with western cities. Chinese citizens felt limited as consumers because of the need to save to cover health, education, and other social provision. Improving social provision, along with a technological and cultural upgrade, is therefore a key priority. Nevertheless, despite these difficulties the residents’ consumption capability has been markedly enhanced and high-grade consumer goods are now more accessible and cheaper. Citizens now expect better quality of life and this may find an expression in the willingness and capacity of citizen public participation in urban governance. The old adage of ‘stressing economy, neglecting society’ no longer works.
Shanghai’s development must be seen in the context of the wider integrated Yangtze River Delta region. There is a daily surge of population flow in the Yangtze River Delta alongside capital, personnel, information, goods, and business flows. This not only promotes the real-estate market and integrates the labour market, but also reshapes the boundaries for administrative policy, leading to social insurance service across the region.
Figure 7.6: Shanghai Hongqiao Transportation Hub
Improving Urban Governance Structure
Shanghai has accelerated the transition from administrative government to service government by forming a new governance structure. In 2015, the city began to reform the street management system. Street management responsibility for social issues was increased while responsibility for economic issues was decreased. By increasing social management functions and ceasing to develop economy at the street level. Shanghai improves governance in the villages and strengthens the mechanism of villagers’ self-government.
Weakening the Incentive System for Pursuit of GDP
Shanghai gave up the GDP-oriented assessment criteria of government officials. Instead, it stressed improving public services and strengthening social management. The new assessment system was trialled during the 12th Five-Year Plan period. This system has 42 indicators, covering transforming the development mode, improving innovation capability, systematic reform, and building a harmonious society. Of these indicators, 30 are relevant to innovation.
Propelling Systematic Reforms in the Pilot Free Trade Zone
The Pilot Free Trade Zone (FTZ), inaugurated in September 2013, aims to become a driving force for China’s reform and opening-up. In April 2015, the FTZ expanded from 28 km2 to 120 km2 to better fulfil its mission, incorporating three more areas: Lujiazui Financial and Trade Zone, Jinqiao Development Zone, and Zhangjiang High-Tech Park. The FTZ covers several aspects. Approval requirements shall be replaced by registration, which will remove administrative burdens for foreign investors and will speed up the implementation process of projects in the FTZ. This is in contrast to the Foreign Investment Guidance Catalogue, thereby classifying industry sectors in China into the ‘Encouraged’, ‘Restricted’, and ‘Permitted’ categories, monitoring how foreigners may invest. A much simpler ‘negative list’ shall apply specifically to foreign investment in the FTZ and certain restricted industries shall be opened up to foreign investment within the FTZ.
Figure 7.7: China (Shanghai) Pilot Free Trade Zone