Growth puts Shanghai in overdrive
Flush with funds and talent, the city is leading the charge in a country of almost limitless potential
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By Michael A. Lev
Tribune foreign correspondent
Published December 21, 2003
SHANGHAI -- It is as if the entire city of Chicago suddenly picked up and left home in search of work.
In the past year, 3 million people have moved to Shanghai, swelling the population of China's booming commercial capital to 20 million.
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The newcomers are desperate peasants, eager factory hands and go-getter executives, all seeking their fortunes in Shanghai at a moment when China looks and feels like Japan in the early days of the postwar economic rebirth.
The statistics are considered extraordinary and the changes mind-boggling. China's potential seems almost limitless, which is a boon to U.S. exporters coveting a new market but a worry for Americans counting domestic manufacturing jobs lost to this new competitor.
The Chinese economy is forecast to grow about 10 percent this year and faster next year, more than any other major nation. In November, China's factories churned out 18 percent more goods than they did a year earlier. The big concern is a power shortage, forcing some production lines to switch to overnight or weekend work.
In fast-forward mode
In Shanghai, the epicenter of Chinese business, everything seems to be happening faster.
The economy is growing at a 13 percent to 14 percent clip. Condominium prices are up 15 percent to 20 percent this year. A Shanghai newspaper last week reported about the phenomenon of speed dating.
What is to be the world's tallest building is under construction in the financial district of Pudong, where space-age office towers are being connected to a glittering new airport via the world's first magnetic-levitation bullet train.
Chen Gang, 41, thinks the standard of living in Shanghai today is as high as in Tokyo, and the business environment far more vibrant.
"The money is here, and so is the talent," said the software entrepreneur, who is moving his family to Shanghai from Japan, where he spent recent years building a company that is refocusing on the Chinese market.
His Shanghai-based company, Changxiang Computer, designs software for automotive global positioning systems. It employs 265 engineers, about two-thirds of whom have moved to Shanghai from other parts of China. In five years, he said, his business could be 10 times bigger as the Chinese car market takes off and GPS becomes popular.
"Shanghai is like a guy in his mid-30s or 40s, while Tokyo is like a guy in his 50s," Chen said. "What I mean is, you're at the point in your career where you've got some experience but you're totally driven and eager to get ahead."
The other half
Not everyone is participating in the boom.
The population explosion in Shanghai speaks to the slow dissolution of the old China as well as the opportunities available in the new. Shanghai says it has added 100,000 jobs this year, but it isn't nearly enough for all the farmers drawn by the false hope of employment. Some prowl the city looking to eke out a living.
With the economy so frenzied, many seem to be getting by, thanks to a trickle-down effect.
On one street in an industrial section of the city, dozens of scraggly men ride bicycle carts or pull wagons, collecting cardboard. They buy loads of TV set boxes and shipping crates for $1 and sell them to recyclers for $1.20. At the end of the month, they may have $30 or $40 in their pockets, which is more than they would get after months in the countryside.
"Of course I want to find a better job with better pay, but I'm a migrant--I know nothing," said Pan Bi Yao, 42, who came to Shanghai early this year. "And there are so many other migrants looking for work. What can I do?"
Wang Feng, a baby-faced 17-year-old, left his home village a month ago. He's earning $50 a month washing dishes at a restaurant, and living in a $25-a-month dormitory. Life, he said, is "exhausting."
At this point in China's development, the gap between rich and poor is wider than it was in the 1940s when the Communist Party was fighting a civil war in the name of liberating the oppressed peasants and workers.
Most Chinese are still poor peasants. There is a surplus labor market of 200 million farmers in the countryside. The urban unemployment rate is a nettlesome 8 percent, due to the closing of antiquated state-owned factories.
China observers say the country must maintain its 7 percent or 8 percent growth to cover the cost of dismantling the old socialist system.
Shanghai Mayor Han Zheng was quoted in the Chinese media this month saying he was concerned about the municipal government's struggle to create jobs.
Yong Wei, 27, moved to Shanghai in April from a small town in central China to become an editor at BeBeyond.com, an Internet and publishing company that focuses on the burgeoning market of college graduates looking for advice on American graduate schools or career counseling.
One of her first moves was to join the Shanghai branch of Toastmasters International, the U.S.-based public speaking club.
Shanghai, she said, feels like the big time.
"It's splendid. It's dynamic," she said. "It's definitely a city of more chances."
`Beyond imagination'
Yong's boss at BeBeyond.com, Xie Jinbo, moved to Shanghai several years ago after finishing graduate school at the University of Illinois at Chicago. Shanghai's growth, he said, "is simply beyond imagination."
His clients looking for career guidance are already successful: a 26-year-old Microsoft manager with 40 subordinates, a 32-year-old high-tech executive earning $135,000.
Success and ambition surround Xie. On a recent flight from Beijing to Shanghai, he said, the Chinese woman next to him was furiously scanning a stack of English- and Chinese-language newspapers. She turned out to be a top executive with a European power plant company that employs 50,000 people in China.
"And this was in economy class," noted Xie, whose own business has taken flight. He is planning to hire 20 to 30 people and open a Beijing branch.
Some observers worried
The pace of China's economic growth has begun to sound worrisome to seasoned observers who know that boom times often beget harmful inflation and speculative investment bubbles that eventually burst. The banking system is already burdened with bad loans.
Even after the Chinese government throttled back on bank credit, the annual rate of new lending is increasing by 23 percent. Steel production is up 28 percent, car manufacturing is up 33 percent and food prices increased 8 percent in November, compared with one year earlier, raising the fear of inflation.
But Andy Rothman, China strategist for CLSA Emerging Markets in Shanghai, said higher food prices were attributed to other factors. Rather than overheating, he said, the formerly stifled communist economy is making up for lost time now that it has gone capitalist. Private homes and cars--along with the mortgages and loans to buy them--did not exist a few years ago, so a buying spree is understandable.
"You can look at China as a post-command economy in its restructuring phase where all this pent-up demand has been unleashed," he said.
Copyright © 2003, Chicago Tribune
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