Rupa Bhojrah, Mark Boyle, Catalina Mancebo, Paola Martinez

SHANGHAI Background Information

HISTORY

Shanghai is currently the largest city in China (by population) and vital for China’s future. It’s an economic, commercial and financial center. Originally it was a small agricultural village and then turned into one of China’s main trading ports (busiest container port in the world). With the economic reforms of the 1990s, Shanghai also became a one of Asia’s principal financial centers.

Between 5th to 7th centuries AD, Shanghai was just a fishing village on the edge of the muddy river Huang Pu.

During the Ming Dynasty (1368-1644), a city wall was built around the old part of town to protect it from Japanese pirates. During this period Shanghai became a major textile center.

During the Qing Dynasty (1644-1912), exports of silk, cotton and fertilizer began reaching countries such as Persia and Polynesia. The First Opium war took place during this Dynasty. When China lost, Shanghai was forced to open up to British consuls, merchants and families. As a result, concessions were made by the governing country, and these were not subject to the Chinese Law. Later other countries, such as France, USA, Germany, began to move into Shanghai with their own confessions. So Shanghai became an important treaty port and was opened to foreign involvement. Each of these countries brought with them their cultural influences.

After 1911, the Xinhai revolution took place establishing the Republic of China. By then, Shanghai had become an important industrial center which attracted foreigners (60,000 by 1930) and Chinese migrants from other parts of the country. By 1930, it became the most important port in Asia and was known as The Paris of the East. Shanghai was a great city; full of great architecture, best art, strong business, dance halls, ostentatious restaurants and international clubs. It was the place to be.

During 1931 and 1941, 20,000 Jews fled for Shanghai to find asylum. During these years, Japanese bombs hit Shanghai (1937) and foreigners left in mass. By 1943, the foreign concessions were finally over and Shanghai had lost its glamour.

In 1949, the communist party takes over and the industry suffers as workers are sent to work in rural China. Fashion, music and the Paris era was over as Communism stepped in. From 1950 to 1980, Shanghai suffered Famine, drought, reforms and suppression. During the the early 1950s, so many people killed themselves by jumping from tall buildings, that residents were scared of walking in the street for fear of being hit.

During the Cultural Revolution Shanghai begins to revive, when China’s leader Deng Xiaoping aimed to rival Hong Kong by 2010. Shanghai is known as the modern China. The city is again full of business accounting for 20% of country’s gross national product. It’s once again one of China’s most open cities culturally, economically, socially and in terms of ideology.

Rupa Bhojrah, Mark Boyle, Catalina Mancebo, Paola Martinez

DEMOGRAPHICS

Shanghai’s population is estimated to be 23.9 million in 2013, and has a population density of 9,700 people per square mile. According to the 2010 census 89.3% of the population is urban while 10.7% is rural.

• Migrants have made the city have the largest growth rate in the country. Migration is so big that it compensating the negative natural growth rate and goes even beyond that. • 98.8% of Shanghai’s residents are Han Chinese ethnicity. The rest is minority groups. • Shanghai has one the highest life expectancy in the world: 82 years. • English is taught as a mandatory course during first grade in public education, so it’s easy for foreigners to get around by speaking English.

GOVERNMENT

Han Zheng is a rising star within the CPC, but history has shown the central government in Beijing to be wary of powerful Shanghai politicians.

Shanghai is one of four municipalities – with Beijing, Chongqing, and Tianjin – that does not fall into a provincial structure, but instead “reports directly to the central government.”1 The municipal government’s structure is illustrative of the heavy influence of the Communist Party of China (CPC), as the Shanghai mayor acts as deputy to the secretary of the Shanghai Committee of the CPC. In addition to Mr. Zheng, Shanghai is served by eight Vice Mayors, who are responsible for issues ranging from real estate development to public health and population control.2

Key People:

Han Zheng – Secretary, CPC Shanghai Municipal Committee • Mayor of Shanghai from 2003-2012 until his selection to the Politburo and his current position as Secretary.3 • His predecessor as mayor was Chen Liangyu, who was imprisoned for corruption. While there have been high profile incidents of corruption linked to municipal officials, these did not hinder Han’s rise from mayor to secretary.4 • Han is seen as a rising member of the party, but some note that his lack of experience outside Shanghai, where he has spent the entirety of his career, may limit how far he can climb within the Politburo.5

Yang Xiong – Mayor of Shanghai, Deputy Secretary of CPC Shanghai Municipal Committee.6

1 Lawrence, Susan V., Martin, Michael, F. “Understanding China’s Political System.” Congressional Research Service 20 March 2013: 9. Web. 19 April 2014. 2 “Shanghai Municipal Government.” The American Chamber of Commerce in Shanghai. Web. 19 April 2014. 3 “Han Zheng.” ChinaVitae. Web. 19 April 2014. 4 Ho, Louise. “Shanghai Mayor Han Zheng at the Crossroads.” South China Morning Post 22 September 2012. Web. 19 April 2014. 5 Ibid. 6 “Government.” Shanghai.gov.cn. Web. 19 April 2014. Rupa Bhojrah, Mark Boyle, Catalina Mancebo, Paola Martinez

The Chen Liangyu Corruption Case

Prior to his arrest in 2006, Liangyu’s career path was similar to Han Zheng’s in that he served first as mayor of Shanghai and then as the municipalities CPC Secretary.7 Charged with helping to skim $4.8 billion dollars from the city’s pension fund, and for abusing his position to secure lucrative real estate deals, Liangyu was sentenced to 18 years in prison in 2008.8

• This case was widely seen as an effort by party leaders in Beijing to check the power of the leader of the economically powerful and politically influential Shanghai.9 • Possibly used by the central government to remind regional politicians that “as Beijing wishes, so it does.”10

Highlights the issues of corruption stemming from the wide gap between what officials are paid and what they can earn through illegal deals with developers, made worse by the “the general lack of transparency in the awarding of government contracts and disbursement of funds.”11

SOCIAL ISSUES IN SHANGHAI

The social issues that exist in Shanghai include but are not limited to: Business growth in Shanghai, infrastructure and transportation, environmental, technology and software development, airports and tourism.

Business Growth in Shanghai:

Shanghai government currently aims to attract regional headquarters by offering incentives and building economic development zones. Last year, the GDP was RMB540.8 billion with a growth rate of 10.9%. This was the 11th year in a row that Shanghai had a double digit economic growth rate. The key industries were electronic and IT products, automobiles, petrochemicals and fine chemicals, high value- added steel products, power plant equipment and bio-pharmaceuticals.

Infrastructure & Transportation:

In the past ten years Shanghai has made tremendous progress in improving its infrastructure and transportation services. For example, there are new roads leading to the Pudong airport and the mag- lev train was a success. However, despite this progress, Shanghai continues to suffer from traffic.

There is an issue with the export and import of household goods. There are only 10 companies that provide this service, and it is suspected that these companies collude on prices for their services.

Last year Shanghai invested a record high of RMB58.3 billion, which was an increase of 14.2% over the previous year. Shanghai also became the fourth largest container terminal in the world. There have

7 “Chen Liangyu.” ChinaVitae. Web. 19 April 2014. 8 Barboza, David. “Former Party Boss in China Gets 18 Years.” New York Times 12 April 2008. Web. 19 April 2014. 9 Ibid. 10 Brown, Kerry. “Shanghai, and the Fall of Chen Liangyu: Corruption, Politics, or Both?” Chatham House China Briefings. No. 1 (2006): 2. Web. 19 April 2014. 11 Ibid. Rupa Bhojrah, Mark Boyle, Catalina Mancebo, Paola Martinez been projects to develop the waterfront area of the Huangpu River, a railway transportation network and pilot urbanization scheme in suburban areas of Shanghai.

Environmental:

There is a “Three year plan of action for environmental protection in Shanghai.” As a result of the of the completion of the first phase, the dark water and foul smell in the Suzhou creak has been close to eliminated and the centralized sewage treatment capacity has increased by 45% over that of three years ago. Air quality is a huge problem in Shanghai, but continues to improve, and has improved by 10% over the past three years. There are now two large trash incineration plants in Jiangqiao and Yuqiao.

Technology and Software Development:

The Shanghai government has adopted many electronic and online applications. Shanghai is attempting to become the “software center” of the country.

Airports:

The Pudong airport charges extremely high rates (highest in Asia with the exception of Japan) for landing fees, aircraft parking fees, office rental etc.

Tourism:

The city of Shanghai has developed the shopping and entertainment center complex Xintiandi to attract tourists. Four and five star hotels are also being continued to be developed.

ECONOMY

Shanghai is the biggest port of China and is a crucial city in terms of trade, finance, culture and information.

Shanghai’s economy is based in industry where it concentrated 157 out of 166 different kinds of industry and the most important ones among it are steel, oil and chemistry, automotive, machine, shipbuilding, textile, instruments and computer12.

The city of Shanghai is not only and industrial city but also is an important commercial port that has developed in a fast path since the last two decades and that has increased people’s quality life standards. Shanghai also has the highest average wage and disposable income and also the lowest urban to rural gap in China13.

The GDP of 2013 was USD$353.9 Billion which meant a growth of 7.7% vs 2012; since 1992, Shanghai has achieved double-digit growth in almost every year. The CPI was 2.3%, which was 0.5% below 2012 and 0.3% lower than China’s average14.

In terms of industrial services, financial services, retail and real state are the most relevant ones.

12 http://www.china-window.com/china_economy/china_economy_guide/china-economy-shanghai.shtml 13 http://www.stats-sh.gov.cn/tjnj/nje11.htm?d1=2011tjnje/E0109.htm 14 http://www.china.org.cn/business/2014-01/26/content_31313988.htm Rupa Bhojrah, Mark Boyle, Catalina Mancebo, Paola Martinez

There are some important challenges that Shanghai needs to address in the next years in terms of law, capital flows, human capital and costs to be more competitive compared to other global financial centers in order to keep being a prosperous city and a center of Chinese development15.

15 http://thechinaperspective.com/topics/city/shanghai/