Rising Shanghai. State Power and Local Transformation in a global megacity

 

di UGO ROSSI

A review of: Xiangming Chen, ed. (2009), Rising Shanghai. State Power and Local Transformation in a global megacity, Minnesota University Press, Minneapolis and London.

This book edited by Xianming Chen, an urban sociologist at the Trinity College of Hartford (Connecticut), where he directs the Center for Urban and Global Studies, was published in 2009, amidst the politico-economic turmoil provoked by the credit crunch that hit the global economy in 2008—09 and just one year before the World Expo held in Shanghai. In some respects, these events have been closely interrelated: first, the global economic crisis brought Shanghai’s stock market down to a record 65% at the end of 2008; subsequently, the hosting of the World Expo – one of the largest expos ever organized worldwide in terms of public investments and tourist inflows – helped the city recover from the impact of the global economic crisis. As a result, the city of Shanghai has resumed its lost development path, witnessing the steady rise of housing prices after the initial shock generated by the economic downturn. The process of urban economic regeneration has gone so far that national authorities have had to cool off the booming real estate market, in order to avoid the bursting of a property bubble similar to the one that led to the credit crunch in the United States and to the subsequent global recession. First, in April 2010 the national government introduced a series of measures aimed at reducing speculative demand for housing, by imposing restrictions on the supply of mortgages (Naughton, 2010); then, in October 2010, in the context of what international mass-media have depicted as ‘currency wars’ between the world’s economic superpowers (China and the United States above all), China’s central bank announced an increase in the official rate of interest. In China, at the regional level the adoption of an increasingly restrictive economic policy is likely to pave the way for conflicts between the national authorities and city governments, as land-centred accumulation has become the key strategy behind local state building (Hsing, 2010).

Having appeared in 2009, this book cannot take into account these important recent events (the global recession is briefly mentioned in the introductory and concluding chapters, while there is no reference to the World Expo). Rather, notwithstanding its weaknesses that will be highlighted below in this review, the book usefully serves as a preliminary guide to the understanding of the ways in which Shanghai might respond and is already responding to current economic turbulences. Indeed, the book aims to provide the reader with an analysis of the socio-economic and spatial transformations that led Shanghai to become a globalizing city within the East-Asian context. This analysis is also sustained by a comparative outlook, placing Shanghai in a broader perspective in relation to the development pathways of other globalizing cities in East Asia such as Singapore and Hong Kong and against the backdrop of the general debate on the role of cities within the global economy. The book thus presents contributions of leading exponents of the global-city literature and of regional development studies such as Saskia Sassen and Ann Markusen respectively. The first part of the book, comprising five chapters, is dedicated to this comparative analysis, while the remaining five chapters deal with aspects of urban economic development and transformation in Shanghai.

From different angles of view, the authors of this book seek to show how Shanghai is striving to become a global city, focusing on the economic sectors that have contributed to this process of urban globalization as well as on the institutional dynamics of reform and re-shaping of central-local government relations behind these transformations. Authors agree in recognizing that Shanghai’s economy has shifted from a primarily manufacturing specialization to being a growing service centre, even though the manufacturing sector has retained an important role. In his introduction, however, Chen points to the increasing demand for skilled professionals in financial services, trade supply and distribution, real estate, international aviation, car manufacturing, biopharmaceutical, new materials, in the years to come. Which means that it is not the sector itself that will matter in the future (whether primary, secondary or tertiary) but the quality of human resources and the capacity to trigger process of innovation and to enhance the competitiveness of Chinese firms at the global scale. The state will have to play a crucial role in this context, focusing more on human resources than on the financing of physical infrastructure. The chapter authored by Fulong Wu analyses in greater detail the various issues relating to the constantly changing role of the state in the process of global-city formation, coming to the conclusion that the Shanghai miracle reflects a tension between the local government acquiring greater responsibilities and the central state seeking to retain its hegemonic position by reinventing itself in a new regulatory space. Potential conflicts aside, Wu emphasizes the fact that the story of reglobalizing Shanghai mirrors that of China struggling to become an international superpower over the last three decades. Symbolically, the announcement of the Pudong New Area in 1990 was decisive to break the isolation of the Chinese government after the Tiananmen Square repression in 1989. In this context, Shanghai became a central space of experimentation with the strategy of state-led marketization pursued by Chinese politico-economic elites over the 1990s.

Few commentators would question, therefore, the common wisdom that the Chinese state has played a crucial role in the economic renaissance of Shanghai, by investing a great deal of resources and symbolical capital. Wu and other authors of this book reinforce this conviction by providing a detailed analysis of the state-driven development trajectory of Shanghai. However, to which extent does it hold true that Shanghai’s economy has been the engine of China’s national growth and global economic ascent? Albeit using analytical tools derived from critical urban studies (such as the notion of urban entrepreneurialism famously coined by David Harvey), this book on the one hand accepts the commonly held view about Shanghai’s central contribution to the economic ascent of China and, on the other hand, it does not really explore the broader socio-spatial consequences of the economy policy being pursued in the name of Shanghai becoming a global city. In a study on economic development in China published one year before the book being reviewed here, Harvard economist Yasheng Huang has dedicated one chapter to Shanghai, provocatively entitled: “What is wrong with Shanghai?” (Huang, 2008). Using a wide variety of data such as those relating to patent grants and income inequalities usually neglected in the studies on China’s economic development (which are customarily based on conventional indicators such as Foreign Direct Investment and Gross National Product), Huang argues that Shanghai is above all the consummation capital of China. In making this argument, he points to at least three contradictions questioning the apologetic representation of the ‘Shanghai miracle’. First, in terms of entrepreneurial vibrancy its economy is poor, not just in comparison with entrepreneurial Zhejiang and Guangdong, but also in comparison with some of the poorest regions of China (Huang, 2008). Second, behind the state project aiming to turn Shanghai into a world-class city there was a systematic push to eliminate the so-called ‘backward vestiges’ of the urban economy, starting with informal activities such as the spontaneous marketplaces that had sprang up in several neighbourhoods in central Shanghai in the first half of the 1980s. Finally, the state-led development of Shanghai led to rapid GDP and FDI growth but at the same time to poor household income growth compared with other Chinese cities and regions (Ibid.).

It is ironic that a mainstream economist draws attention to the dark side of Shanghai’s development path, while urban scholars using critical analytical tools overlook problematic aspects of the process of global-city formation such as the generation of income inequalities and the dismantling of the street-level economy led by indigenous entrepreneurship. It should be noted, however, that this lacuna is present also in other studies dealing with the pathways of global city formation in the East-Asian context. This perhaps might be revelatory of urban scholars’ unconscious fascination with capitalism’s capacity for self-regeneration in the emerging economies of the Global South. For one reason or another, this observation must lead to the conclusion that, despite its abovementioned merits, Rising Shanghai could have been much more incisive as a critical contribution to the advancement of knowledge about contemporary China and more generally about globalizing cities and the capitalism-urbanization nexus in East Asia.

* da City

References

Hsing, Y-t. (2010) The Great Urban Transformation. Politics of Land and Property in China. New York: Oxford University Press.

Huang, Y. (2008) Capitalism with Chinese Characteristics. Entrepreneurship and the State. New York: Cambridge University Press.

Naughton B. (2010) ‘The turning point in housing’, China Leadership Monitor, n. 33 (http://www.hoover.org/publications/china-leadership-monitor).