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Tuesday, March 20, 2001

Shanghai, the heart of China

Special to The Japan Times
NEW SHANGHAI: The Rocky Rebirth of China's Legendary City, by Pamela Yatsko. Wiley, 2001, 298 pp., 2,300 yen (paper).

Few doubt that Shanghai is the nerve center of China's second "Great Leap Forward." This metropolis -- long considered the most cosmopolitan of all Asian cities -- is the cornerstone of high-tech, financial and manufacturing activities in China. It is also a magnet for Chinese creativity, a Mecca where genuine communication among scholars, businessmen, and journalists takes place in relative freedom.

Pamela Yatsko arrived in Shanghai six years ago as a correspondent with the Far Eastern Economic Review. She spoke Mandarin and was able to use an academic background to maneuver through the many worlds that function at the same time: worlds of big financial deals, high hopes and even illegal drug deals.

The book is more than a story of one city. Its anecdotes and interviews capture the face of the world's most populous country.

Shanghai has its own dialect, as natives are proud of reminding Japanese and Western visitors. It has developed its own unique business style, one appreciated by the many foreign professionals who seek relief from the bureaucratic style seen elsewhere in China. And Shanghai, unlike any other Chinese city, has a large number of admirers outside the country. To have explored it even once is to have tasted the best offerings of a Chinese buffet. Few visit without experiencing the genuine warmth of a population captivated by foreigners, eager to learn, and bold enough to share views.

Shanghai has changed, but in one way it remains the same: It is the engine of China's growth. In 1999, one-fifth of all the construction cranes in the world were towering above the city's landscape. The wealth developed within its borders is funneled across vast areas of China. Millions of unemployed men and women from the poor rural provinces moved into Shanghai's shantytowns and slums, earning paychecks in the construction industry and taking low-end service jobs. They send money back to their families. Shanghai helps relieve the crushing burdens of structural change as China copes with downsizing its debt-ridden government monopolies.

There are urban problems, but Yatsko's book explains why the city will be able to endure hardship and rise up again. The city's economic muscle was robust throughout the 1997-98 Asian economic crisis. More than 700 billion yen in direct investment poured across Shanghai's borders last year and, unlike the rest of East Asia, the city of 12 million continues to register strong economic growth.

Shanghai has an enduring commercial history. It was close to China's silk industry and the Silk Road, launching a major chapter in worldwide commerce. It was a haven for immigrants and European refugees during much of the World War II, offering Japanese, French, Jews and others opportunities to build connections that would otherwise have been impossible.

The great overseas Chinese families who used Shanghai as the foundation for their regional trade networks fled to Taipei in 1949, using their capital and contacts to spawn Taiwan's rise as an economic power. Shanghai's sons and daughters are bridging ties between the two Chinas.

Trade, trade, trade. "The outlook for multinationals in Shanghai looks reasonably bright," says the author. Trade and economics are the lifeblood here: Shanghai is the world's third-largest port (in terms of cargo tonnage) and its "native sons" include Zhu Rongji and other forward-thinking Chinese leaders.

The book describes a livable city with user-friendly mass transit and attention to urban planning. The old Shanghai, with its famous 19th-century European architecture and vibrant cultural and intellectual life, is one part of the story. The other part is Pudong -- a 200-hectare planned town (within the city's borders), bristling with gleaming high-tech towers.

Pudong International Airport is only two years old and acclaimed as state-of-the-art. New free-trade zones, warehousing centers and distribution complexes are -- like most commercial real estate -- mostly empty. But this will change.

This is a well-written book that has enough variety to satisfy general-interest readers and businessmen alike. The inside stories based on interviews make for good reading. The book takes readers to the streets, where daily life and challenges confront the average resident, to the government agencies where decisions are made, and to offices where trading ventures are born.

But it also shows the cultural aspects that overlap all other aspects of life. From the elegant, high-tech Shangri-La Hotel to the centuries-old street markets, this is a solid account of Shanghai's past, present and future.

The book asks -- and answers -- a key question: Can Shanghai become Asia's premier financial center? The city will host this year's Asia Pacific Economic Cooperation forum, bringing together heads of state and economic ministers to discuss trade and financial issues. Shanghai is a perfect place to set the course for the region's economic transformation. At APEC, China will use the city as a national showcase for the world. Perhaps that showcase can influence China's own leaders.

Julian Weiss visited Shanghai five times on magazine assignments. He is a senior fellow at the Heritage Foundation in Washington, and author of "Tiger's Roar: Asia's Recovery and its Impact" (to be published in June by M.E. Sharpe).

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