Much of the shine of Shanghai’s growth fades when you read about the venal types in charge of the Shanghai city government when the crazy development peaked during the 1990s and early 2000s. As detailed in The Party (thanks for the recommendation Ramzi!), ego, corruption and Shanghai-Beijing pissing contests fuelled much of the development we foreigners stare at in awe, thinking it clear evidence of China’s inexorable rise.
Shanghai’s economy is, on the face of it, the paradigm for China’s shift towards a form of market capitalism. The city looks like it has completely rejected Communist ideals, with its investment banks, mobile phone companies, and real estate corporations. The Party argues that the modern glitz of Pudong actually obscures a very different reality:
The image — that Shanghai had returned to its entrepreneurial heyday — was far from reality. Unlike southern China and the Yangtze delta region, where Deng [Xiaoping’s reform] policies had bred a risk-taking, private economy, Shanghai was developed as a socialist showcase. Few visitors admiring the skyscrapers realized that most of them had been built by city government companies. Far from being the freewheeling marketplace that many visitors believed, Shanghai represented the Party’s ideal, a kind of Singapore-on-steroids, a combination of commercial prosperity and state control.
In essence, much of the city’s economy is state-owned, disproportionately so even by Chinese standards. When the local Party secretary was attacked in the mid-2000s by internal rivals who said the city was too capitalist, he could fairly respond that “If I am not mistaken, our country’s private enterprises produce over 40 per cent of GDP nationally. Here in Shanghai, state enterprises produce nearly 80 per cent of GDP. If you want to discuss who adheres most to socialism, couldn’t it be said to be Shanghai?”
Fair point or not, it didn’t really help him, or the rest of the Shanghai crew who brought such crazy times to the local economy and politics. Eventually their very public independent growth and refusal to dance to Beijing’s tune meant that the folks at the centre would no longer turn a blind eye to the excess — the $300 million tennis centre, the billion-dollar racetrack, that billion-dollar maglev to the suburbs. That same excess, and the local party’s overwhelming control of the city’s economy and government, bred monstrous corruption, particularly in the area of real estate transactions and the relocation of rather unfortunate local residents from the sites of the new condos and luxury shopping developments. When the central government in Beijing finally had enough, this was all they needed – the anti-graft cops of the Party’s Central Commission for Discipline Inspection moved in. Now the heyday folks are all out of a job, and most were locked up.
But it’s all very shiny and cool.