San Jose Mercury News,
February 8, 2004 Sunday
A Tale of Two
By KARL SCHOENBERGER
China – Imagining the past is irresistible in this city of ghostly colonial
architecture. Here, historic treasures from the jazz age survived the
excesses of Maoism, only to be squeezed by a thickening forest of
silver-skinned skyscrapers. But the grandeur and the mystique of Old
Shanghai is powerful enough, still, to screen
out the eyesores of China’s great leap into capitalism.
Visually, Shanghai is a feast. It is a film set for a history of colonial
exploitation, with its granite bank buildings from the 1920s and ‘30s and
its sumptuous Western mansions scattered about the old French quarter. The
old architecture conjures up a distant era when the opium trade made
European traders and their Chinese cohorts sinfully rich, when those elites’
wealth and decadence contrasted with the misery of the Chinese underclass on
the streets. That cruel disparity helped give birth to the Chinese
communists, who held their first party congress here.
The imagined grandeur of old Shanghai is as deceptive as it is revealing of
contemporary China. All the excitement about Shanghai’s emergence as a
global financial capital masks the reality that the Dickensian divide
between wealth and poverty is as troublesome today, in the twilight of
communism, as it was in Shanghai’s glory days.
Over the past 16 years, Shanghai has been my window into China, my barometer
for the country’s progress. I’m not a China hand and do not speak the
language, but I reported on China out of Hong Kong and Tokyo and have
traveled around the country. I think I’m one of many Western journalists who
feel a strange intimacy with Shanghai.
Its past, gilded and sordid, makes the contradictions of China’s current
status, socialist and capitalist, easier to digest.
The city’s architecture takes you halfway under Shanghai’s
skin, giving you at least a partial comprehension of China’s shame at its
subjugation by the Europeans and then the Japanese, its pride in its
newfound power—and its ambition. You can’t say Shanghai is a typical Chinese
city, but you can argue that it is pointing in the direction China wants to
go: sophistication in high finance and high technology, and proficiency in
the social engineering of benign authoritarianism.
Currency, sex were easily exchanged
I was on vacation when I first visited Shanghai in 1987. I’d read that
Chinese leader Deng Xiaoping’s bold reforms were opening up a socialist
market economy “with Chinese characteristics.” Indeed, I saw the market
economy in action soon after checking into the Peace Hotel, a shabby but
ornate state-run hostel. The pyramid-domed Peace was a landmark on the
historic Bund, a long boulevard of decaying, but still majestic, 1930s
commercial buildings lining the Huangpu River.
On the raised concrete promenade along the river, young blue-eyed Uighurs—members
of the Islamic ethnic population from northwestern Xinjiang Province—had
benefited from reforms that loosened travel restrictions. They vigorously
pursued the local market in currency arbitrage. Dressed in tattered
clothing, they hounded me with hoarse whispers of “Change money, change
The world’s oldest trade also seemed to have been liberated from prudish
communist mores. At a restaurant near the Peace, an assertive female
entrepreneur accosted me with a timeless business proposal. Rebuffed, she
called my hotel room repeatedly until I complained to the management.
The experience was irritating but evoked the fantasy of Shanghai’s sinful
past, when the seaport was called the “whore of the Orient,” when the
streets were filled with rowdy foreign sailors and opium dens. I indulged in
that aura of a lost era later at the hotel bar, where some of the original
musicians from the Peace Hotel Jazz Band—purged for its Western decadence in
the 1950s—had reassembled and honked out sluggish renditions of “Brazil” and
“When the Saints Go Marching In” and “The East Is Red.” I was a tourist,
hooked on Shanghai.
Nanjing Road, the city’s main commercial artery running perpendicular to the
Bund, was so jammed with bicycle traffic that taxis and other autos took the
side streets, blasting their horns in broken Morse code to make progress.
The city had a frenetic feel to it, wrapped in Stalinist gray. When I tried
to buy a hat at the dowdy, Soviet-style Shanghai No. 1 Department Store, the
clerks were sullen and indifferent. They sent me from one counter to
another, where I’d get the same languid response, “Mei yo” (don’t have it),
even when I pointed to a rack of hats.
In 1987, Deng’s spirit of entrepreneurship had not produced much competition
in the retail sector. These ladies didn’t care whether they sold me a hat or
not. Their jobs were secure. When I finally made the purchase, they tortured
me with paperwork; little slips of paper had to be taken back and forth to a
Tumult scares foreigners away
A little bit of terror was in the air when I made my second trip in Shanghai
in June 1989. Nanjing Road was cut off to traffic by a bus barricade that
protesters had set up in the big intersection in front of No. 1 Department
Store. They had acted in sympathy with the pro-democracy student
demonstrators camped out in Beijing’s Tiananmen Square. Two days earlier,
People’s Liberation Army troops had cleared the Square by shooting their way
through throngs of citizens who blocked their way.
I had “parachuted” into Beijing, and now Shanghai,
to cover the unrest for the L.A. Times. One man I met aboard a barricaded
bus helped me read the protest signs taped to the windows, then insisted I
join him for tea and dim sum the following morning at Yu Yuan Garden, in the
warren of narrow lanes winding through the old Chinese sector.
I suspected he was a plainclothes cop, keeping tabs on foreign journalists,
but he did a good job interpreting the rage toward Deng and the central
government expressed by the shopkeepers and patrons we interviewed along the
way. Those killings wouldn’t be allowed in Shanghai,
they said, and they were right.
In the week after the bloodshed in Beijing, Shanghai Mayor Zhu Rongji (later
China’s premier) rejected the idea of calling in troops and showed dignified
restraint when tens of thousands of protesters marched up Nanjing Road from
the Bund to People’s Park. They went home quietly after a last day of
Then the barricades came down and the narrow streets filled again with a
riot of bicycles, honking taxis and careening buses. I filed a dispatch to
Los Angeles that began: “The streets of Shanghai were in chaos Thursday—that
is, things had started returning to normal.”
But things weren’t returning to normal. The foreign businessmen making their
first steps into China’s potentially vast market economy bailed out, spooked by the risks of
further political instability. Construction on the giant
Shanghai Center luxury hotel and office tower
project ground to a halt. The head of the fledgling American Chamber of
Commerce in Shanghai,
investment lawyer Norman Givant, was deeply pessimistic about the impact of
the political violence in Beijing. “Political and economic reform must go
hand in hand,” he said.
Boom lures investors
Poor left behind without a safety net
When I came back seven years later, in 1996, Shanghai was a boom town,
reeking of frothy prosperity. The completed Shanghai Center’s Portman Hotel
was a deal-making hot spot for foreigners. Big American companies like Intel
and General Motors were investing billions in local factories. The city
redevelopment authority had turned the vast expanse of rice paddies on the
east side of the Huangpu River—Pudong—into a fairyland of office towers. A
futuristic TV tower skewering a purple orb had become a distinctive, if
tasteless, symbol of Shanghai’s
raw energy and boundless optimism.
Mr. Li, a solicitous young man from the city information bureau, gave me a
grand tour of Pudong’s mostly vacant and under-construction edifices. We
finished on a barren street at the foot of the handsome new Shanghai Stock
Exchange building. I gave a 1-yuan coin (12 cents) to a beggar woman holding
an anemic-looking child, and suddenly out of the shadows came a swarm of
street urchins who clung to me. Mr. Li had to pry the children off, one by
one, before I could get into our car, shaken.
Over the past two years, I’ve returned twice to Shanghai on assignment for
the Mercury News. By my latest trip, in December, China’s GDP had ballooned
since my first trip in 1987. The central part of Nanjing Road had been
turned into an upscale pedestrian mall, thronged with cheerful, well-dressed
shoppers and lined with shining new retail outlets. City planners tried to
ban bicycles from major roads to make way for all the new cars, but they
were deterred by a popular uproar.
I returned to Shanghai No. 1 Department Store to buy a hat. It was still a
state-owned enterprise, but bright lights now illuminated the glass counters
selling perfumes and jewelry. Upstairs, three grinning clerks in the men’s
accessories department chortled out English phrases as they assisted me.
I selected a black felt dome cap; it was a little too large, but I wanted to
reward the clerks for their enthusiasm. I did, however, still have to make
the same trek I did 16 years earlier to and from the cashier’s cage with
triplicate slips of paper to make payment (about $8) and redeem my
merchandise. It was a subtle reminder that China’s economy remains mucked up
by the managerial acumen of state-owned enterprises, including big
industrial concerns that can’t sell the things they make, but continue
borrowing money to make them anyway.
That is just one reason why I can’t help remaining, at a gut level,
skeptical of Shanghai’s
wondrous transformation and, by extension, China’s economic miracle. I
witnessed financial bubbles burst in Japan and in Silicon Valley, and I
sniff a classic case of tulip mania in Shanghai.
The office towers in Pudong are populated by legions of international bank
employees, but partly because authorities required their firms to transplant
local headquarters from the charming old city to fill the vacancies in
Pudong. Communist central planning is alive and well in a real estate market
dominated by state-owned enterprises.
It’s always possible the Chinese economy—now expanding at an annual 9.1
percent clip—can grow fast enough to make my doubts about Shanghai’s
stability irrelevant. To be sure, Pudong isn’t a wasteland. There’s an
American residential village with gated villas, a golf club and a new
high-tech industrial park out near the new airport. A dozen international
schools serve the expatriate community, which includes some 300,000
transplants from Taiwan. The Taiwanese brought with them the core of a
cutting-edge high-tech manufacturing base.
I make a point of lodging in the old city, Puxi (across the river from
Pudong), and stay at the Peace Hotel if I can. The Peace underwent a major
remodeling but still retains a bittersweet patina of communist
mismanagement. Its famous jazz band still plays off-key. For me, the Peace
is seductive because it has an element of retro-corniness to it, evoking the
glory and the decadence of Old Shanghai and all that was lost to decades of
grim leveling under communist rule.
What’s revealing about Shanghai’s
past, though, is that the city has come full circle to a present where
Pudong’s commercial opulence was made possible by mass evictions of peasants
who had farmed its rice paddies. The high and the low seem eternal here.
Today’s urban elite behave as they do in any cosmopolitan city, and on the
surface, they pass the “just like us” litmus test we American missionaries
look for. They hang out at international-brand coffee franchise outlets and
have become lavish consumers of luxury goods. But as in any Asian supercity—Shanghai
now has more than 20 million people—you don’t have to look very far to find
scenes of humiliating poverty.
The sight of disabled people exposing shrunken limbs on the sidewalks of
prosperous shopping streets, paper cups outstretched, is what disturbs me
most. They are symbols of China’s dire lack of a social safety net, a
critical gap that also puts the hundreds of millions of workers relying on
doomed state-owned enterprises in peril.
Imagine the social chaos that could result if Shanghai’s
financial bubble burst. It would cut off the billions of dollars in
non-performing loans from state banks that keep state-run businesses afloat.
I can’t help going back to the question of June 1989, when so many American
businesses retreated: Is it possible for economic reforms to truly succeed
without political reform? Can Shanghai prosper in the long run without
popularly elected political leaders—and the accountability that implies—on
the local and national levels? Can China prosper if human rights abuses, the
detention of political prisoners and the suppression of labor activists and
religious leaders continue? It’s much too soon to celebrate Shanghai’s,
and China’s, stunning economic progress.
I am grateful, however, to Shanghai’s urban-planning autocrats, who are
restoring the bank buildings along the Bund and sparing many of the city’s
architectural relics from the wrecking ball as Puxi sprouts skyscrapers. It
keeps alive the fantasy of Old Shanghai for visitors like me to comfort
themselves in, waiting for the real China to show its face.
KARL SCHOENBERGER is the Pacific Rim reporter for the Mercury News. He has reported on
Asia for 22 years, including for the Los
Angeles Times and the Wall Street Journal.