Siah Hwee Ang says Shanghai provides a glimpse of how Chinese cities can evolve

By Siah Hwee Ang*

Shanghai is one of the first places that springs to mind when we think of Chinese cities.

A big city with a population of more than 24 million, Shanghai has a GDP of US$16,553 per capita. At twice the country’s average, this places it third behind Tianjin and Beijing.

As a developed city within a developing country, Shanghai is a symbol of China’s aspirations.

And compared with other major cities of China, Shanghai’s global outreach cannot be matched.

A snapshot of Shanghai’s economic development

Shanghai is the commercial and financial centre of mainland China. It is one of the four direct-controlled municipalities of China.

Located in the Yangtze River Delta in East China, Shanghai sits on the south edge of the mouth of the Yangtze in the middle portion of the Chinese coast. The municipality borders the provinces of Jiangsu and Zhejiang to the north, south and west, and is bounded to the east by the East China Sea.

In the last twenty-five years, Shanghai has recorded double-digit growth almost every year except during the global recession of 2008 and 2009. Its sustained growth is phenomenal by any standards.

Shanghai’s GDP growth in the first half of this year was 6.7% year-on-year, on par with national average.

Over the last five years, the total output contributed by the services sector has risen by 10% to reach 70.8% of the city’s GDP.

In September 2013, the city launched the China (Shanghai) Pilot Free-Trade Zone, the first free-trade zone in mainland China. The Zone introduced a number of pilot reforms designed to create a preferential environment for foreign investment.

Shanghai has the world’s busiest container port, which handled 29 million TEUs (twenty-foot equivalent units) in 2010 and 36.5 million in 2015.

Internal developments go hand-in-hand with exterior economics

Maintaining its competitiveness remains a priority for the Chinese city icon.

According to the city’s latest blueprint for development covering the period until 2040, it intends to cap its population at 25 million for the next 25 years.

It also seeks to reduce the average commuting time from 50 minutes to 40 minutes in the same period.

Shanghai leads the country with the most developed public transportation.

Some 73% of residents live within one kilometre of a bus stop. Of these, 53% live within 500 metres of one.

The city also boasts the most developed subway system in China with the highest density and a whopping 600 kilometres of track.

In April this year, the Shanghai Tower, the second tallest building in the world was opened to the public after seven years of construction. The skyscraper stands at 632 metres tall. The building is already on many collaterals that pitch the city and China to the rest of the world.

Shanghai will position itself as a pioneer of urban economic powerhouses by developing the Yangtze River Delta as a world-class cluster of cities. The new cluster comprises 26 cities, including Shanghai, and parts of Jiangsu, Zhejiang and Anhui provinces.

Increased potential with clustering approach

The three provinces and Shanghai form a region that has contributed 21.19% of China’s GDP, though only commands 16.7% of the national population and 3.7% of the country’s land.

The clustering approach will no doubt bring in even more business interests.

Shanghai’s airports handled 99 million air passengers alone in 2015. The city intends to increase this to between 160-180 million air passengers in the next decade or so.

In addition, it also aims to cement its reputation as an international shipping hub by increasing its container traffic by 15% in the next few years. Shanghai’s ports are already number one in terms of throughput and have been for the last six years.

It is clear that Shanghai has worked out a host of internal and external development strategies. Many of these strategies are not different from China’s overall strategies for the country as a whole.

Shanghai is however ‘smaller’ and more nimble than the rest of China and has amassed a significant head-start in its competitive landscape. So we can expect that other Chinese cities will follow suit over time.

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*Professor Siah Hwee Ang holds the BNZ Chair in Business in Asia at Victoria University. He writes a regular column here focused on understanding the challenges and opportunities for New Zealand in our trade with Asia. You can contact him here.