An expert's point of view on a current event.

The Rise and Fall and Rise of New Shanghai

Is history repeating itself in China's glittering global city?


See more photos of Shanghai when it was Asia's Vegas here.

See more photos of Shanghai when it was Asia’s Vegas here.

The members of the Harvard Medical School Class of ’08 were exceedingly ambitious — even by Harvard standards. Not content merely to graduate from America’s top med school, a small group of them set out to found an entirely new campus of their alma mater abroad. As they looked out across a world knit together by instant communications and intercontinental travel whose center of gravity was shifting to the rising Pacific Rim, there could be only one choice: Shanghai. China’s financial hub and international gateway seemed destined to blossom into the leading global city of the new century. The get-rich-quick schemer’s paradise that had grabbed the world’s attention as an Asian El Dorado now had its sights set on becoming a cultured and cosmopolitan Paris of the East.

The year was 1909, and it took more than three weeks by ship for the Harvard doctors to cross the Pacific and make it to Shanghai. But already the city they encountered, with its Scottish opium traders, Jewish real estate magnates, Sikh police officers, Cantonese merchant princes, and pidgin-English lingua franca, was the most open metropolis the world had ever seen. Neither passport nor visa was required for entry. An introduction to the city authored in the 1920s by an American expat gushed about its worldliness: "When a traveller arrives in Shanghai to-day he is struck by the fact that to all intents and purposes he might be in a large European city [on account of the] tall buildings, the well paved streets, the large hotels and clubs, the parks and bridges, the stream of automobiles, the trams and buses, the numerous foreign shops, and, at night, the brilliant electric lighting — all are things he is accustomed to."

But for all that, this Shanghai was a place of danger as well as opportunity: The rebellious political life it cultivated would topple China’s emperors just months after the young doctors’ arrival. Their own venture collapsed just a few years after its launch.

The cosmopolitan Shanghai that lured them there had been born decades earlier when, in the 1840s, the rising Western powers forced the Chinese emperor to accept the first of the "unequal treaties." Within the city limits, foreigners were exempt from Chinese law; legally it was as if they’d never left home. Soon the peculiar legal principle of "extraterritoriality" became a physical reality as Britain, France, and the United States carved out concessions from the open land surrounding Shanghai’s centuries-old walled city, then a regional hub of some 200,000 people in the fertile Yangtze River delta. The settlements the foreigners built starting in 1845 looked like their home countries in miniature. The French Concession became famous for its beautiful tree-lined streets and elegant cafes, the British for its sumptuous private clubs, and the American for the bustling commerce along its main thoroughfare, Broadway. Just a decade after its creation, foreign-dominated Shanghai was China’s leading international port, displacing Canton on the Pearl River. Within two decades, Shanghai was the fastest-growing city on the planet.

But for its Chinese majority, the boomtown was a deeply demeaning place to live. In the foreign concessions, Chinese, who typically worked as manual laborers (called "coolies" in pidgin English, from the Chinese kwei-li meaning "bitter strength"), were demoted to second-class citizens. Jim Crow-style segregation laws passed by the all-white Shanghai Municipal Council banned locals (and dogs) from the city’s public parks. Even white-collar Chinese working for leading Western firms were forced to use Chinese-only bathrooms. For all the city’s dynamism — a dynamism to which the Chinese elite, founding their own companies and forging their own modern culture, increasingly contributed by the early 20th century — conditions proved so humiliating that the locals ultimately formed the Chinese Communist Party, which later closed not only Shanghai but all of China to foreigners for decades.

Today, that same Communist Party, founded in Shanghai’s French Concession in 1921, is guiding the city’s re-engagement with the wider world, hoping to prove that Chinese-run Shanghai can be bigger, better, and more globally important than the city ever was under Western domination. Mindful of the city’s complicated history, the authorities have been trying to let it breathe economically while stifling the cultural, intellectual, and political openness that made the metropolis so vibrant — and unruly — a century ago. But they are all too conscious of what happens when you lift the lid on Pandora’s box: The hubris of the first global Shanghai took down an entire country.

That happened after Shanghai had already been open to the world for 100 years. By contrast, Shanghai’s current re-engagement is still young. Lobbied hard by Shanghai Mayor Zhu Rongji and impressed by his iron-fist-in-velvet-glove management during the Tiananmen Square crisis, paramount leader Deng Xiaoping in 1990 authorized redevelopment of the city. On a visit to the city two years later, he doubled down on the project, anointing Shanghai the "Head of the Dragon," China’s leading city, and supposedly uttering the exhortation "faster, faster" as he crossed a bridge between the old foreign concessions and the new downtown rising on the opposite bank of the river.

Almost overnight, the metropolis, mothballed since its 1949 "liberation," took on a momentum reminiscent of its pre-communist heyday. Having expropriated the city’s land under Mao Zedong as part of the communist abolition of private property, the local authorities leased it out to real estate developers in the 1990s, raising tremendous sums for infrastructure improvements. With its newfound billions, the municipality soon built the world’s greatest civic infrastructure, including a brand-new international airport linked to downtown by magnetic-levitation train, a new subway system larger than that of New York or London, and a tangle of bridges and tunnels connecting the historic center of Shanghai in the former foreign concessions to the new financial center of Pudong rising across the river.

Shanghai residents whose homes stood in the way of this government-backed progress were forcibly moved. More than a million families were evicted and rehoused in the effort to resurrect Shanghai as an international business hub. Dismissed as a white elephant or even a delusional throwback to discredited Soviet-style central planning, the reopened Shanghai was soon birthing fortunes in real estate and finance and luring top global companies, including many, like HSBC and Citibank, that had dominated the city’s economy 100 years earlier. Late-1990s Mayor Xu Kuangdi’s oft-mocked remark that he was purposefully overbuilding Shanghai like a savvy parent who buys an oversized suit for his growing boy came to sound prophetic. The city’s stunning growth vindicated its Communist Party planners, but it also threatened to spin beyond their control.

Pudong, the sparkling new glass-and-steel downtown that Deng had exhorted to rise faster, soon dwarfed the 1920s Art Deco edifices of the foreign-built Bund directly across the river. Known for the flashiness befitting a city that went from rags to riches in just two decades, the most eye-catching of the new skyscrapers is clad in an enormous LED screen illuminated at night. Like a giant television set over a bar, it’s almost impossible to look away — regardless of what’s on. One expatriate European architect compared the mismatched towers of Pudong to women’s outfits at the opera, where standing out and being noticed are more important than looking tasteful or, even, good. In the opinion of one American architecture critic, the point is size, not style: "Pudong’s priapic towers literally overshadow the relics on the other shore, as if lifting a collective middle finger to the West."

Beyond the city’s physical structure, economic and social policies were put in place to ensure the reglobalized Shanghai would not host a repeat of the city’s dynamic but demeaning — and ultimately revolutionary — past. In stark contrast to the days of open immigration, when neither visa nor passport was required for entry, foreign visitors and expatriates are closely monitored. They make up just 1 percent of Shanghai’s population today, a far cry from unregulated, polyglot Old Shanghai, let alone today’s more typical global business hubs. (New York, for example, is 37 percent foreign-born.) Rather than import millions of foreign experts to help run Shanghai’s global businesses, the authorities have goosed the number of Anglophone Chinese professionals in the city by treating the municipality as if it were an elite college with a competitive admissions process: Hinterland Chinese can obtain a Shanghai residence permit by earning a degree from a national-level university and passing tests in computer literacy and English fluency.

Less-educated Chinese hoping to work in Shanghai are on a much tighter leash. Cognizant that it was the discontented proletarian masses of Shanghai who turned communist and rose up to overthrow Shanghai 1.0, today’s authorities use the hukou registration system, the internal passport regime in place since the late 1950s that officially binds Chinese citizens to their hometowns, to control the new coolies building the city’s muscular skyline. Rural Chinese are brought in by the millions to work in construction, only to be sent back to the countryside after their job is done. According to an official government estimate, widely regarded as a lowball figure, roughly 6 million of Shanghai’s nearly 19 million people are internal guest workers. Although they often overstay their official welcome (precise numbers are never reported), ID checks and domestic immigration sweeps are common, especially before high-profile international events like the 2010 World Expo. Such humiliations breed tensions between the city’s ragged, leather-skinned migrant workers and its privileged official residents marked by their cosmopolitan fashions and good health. (Official Shanghai residents now have a longer life expectancy than Americans, not to mention better school-test results.)

Wary of the days when Western companies like Standard Oil and British American Tobacco siphoned off their locally earned profits to New York and London, leaving most Shanghainese impoverished (life expectancy in the 1930s was just 27), regulations today push multinational companies to partner with local Chinese businesses. In Shanghai 1.0, the Pudong district was home to the notorious sweatshops of Western multinationals. But the garish towers of Shanghai 2.0 rise quite literally atop Old Shanghai’s shame. The sweatshops now, of course, are on much cheaper real estate inland up the Yangtze — and owned by locals. With China standing proud, foreigners, once resented as leeches and locusts run amok, are now seen as a pleasant reminder of the city’s global cachet. Even the return of a modified extraterritoriality — expatriates enjoy more freedom of worship and association than locals do — has not become a source of tension. At least not yet.

Mindful that it was exposure to foreign ideas, the heady brew of liberalism and communism, as much as to foreign people that destabilized Old Shanghai, today’s authorities keep a tight lid on the city’s intellectual and cultural life, even by the strict standards of the People’s Republic. At the turn of the last century, Chinese journalists in the foreign concessions, safely beyond the reach of the emperor’s censors, launched China’s freest press. And seizing on the republican principles of the Shanghai Municipal Council, local Chinese taxpayers in 1905 created their own elected city council, an unprecedented form of representative government in the empire. Needless to say, contemporary authorities have no intention of allowing freedom of the press or electoral democracy in Shanghai today. Notably, Chinese authorities tar such human rights with the pejorative term "global values" (meaning: not ours), dismissing them as irrelevant — even to China’s most proudly global city.

Even less overtly political ideas from abroad are monitored and controlled. United Artists, MGM, and Warner Bros. all had major offices in 1930s Shanghai; today only 20 foreign films a year are permitted to be screened in all of China. And for all the international flights landing at Shanghai Pudong International Airport, which opened in 1999 and already has annual passenger traffic comparable to New York’s JFK, Shanghai is far less open to foreign culture now than it was back in the Roaring Twenties. In those days, top jazz musicians from New York, New Orleans, and Chicago were in residence in the city’s famed nightclubs. But ever since 2008, when Björk shouted "Tibet! Tibet!" from a Shanghai stage during a performance of her song "Declare Independence," local authorities have subjected touring artists to strict scrutiny. In 2009, the nascent Shanghai Fringe Festival — an offshoot of the low-budget, high-ambition live-arts festival that takes over Edinburgh, Scotland, each year — was forced to move its international performances to smaller peripheral cities because, as the organizers complained, the Shanghai government had "some nonsense issues." Chinese performers find the Shanghai cultural commissars particularly meddlesome. As Zhang Shouwang, the lead singer of Beijing rock band Carsick Cars, told me after a gig on his U.S. tour, "Shanghai is more restricted than Beijing.… Once, when we played there, someone called the police. That kind of thing always happens in Shanghai."

Turning down the volume on all forms of free expression is part of a bid to build a Shanghai that is seen rather than heard. The goal is a city that imports all manner of global commodities without the dreaded "global values." For the modern rulers in stodgy Beijing, the ultimate aim of Shanghai 2.0 is a sparkling model metropolis (The fastest train in the world! More skyscrapers than Manhattan!) to vindicate the top-down system that built it.

As one top reform-era Politburo member explained with uncharacteristic candor, the resurrection of Shanghai is best understood as a bid to make up for the Communist Party’s Maoist-era mismanagement of the city — a record of folly that called into question the party’s right to rule. "Before liberation," former Premier Zhao Ziyang wrote in his memoir, "Shanghai was a highly developed metropolis in the Asia Pacific Region, more advanced than Hong Kong, let alone Singapore or Taiwan. But after a couple of decades, Shanghai had become run-down and had fallen far behind Hong Kong, Singapore, and Taiwan. This made people ask, What exactly is the advantage of socialism?"

Today, China’s new mandarins hope that Pudong’s skyline is the answer.

Daniel Brook is author of the forthcoming book A History of Future Cities.

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