July 18, 2011 - Shanghai: Musings about a truly commercial city

I was secretly hoping that the American Chamber of Commerce in Shanghai would be a breath of home…and it was…with a Starbucks on the corner and a restroom with free toilet paper AND non-squattie toilets it was a perfect oasis.  

Our speaker, Oliver, was fantastic…here are some of the highlights I gleaned out as I am still trying to wrap my brain around China and put it all into perspective:

-18 cities in China have populations over 8 million

-China has the third largest economy in the world with a GDP of 4.9 trillion USD

-Foreign investments employ 8.2% of Chinese

-Shanghai is a city of 24+ million people with a per capita of 11, 563

-Shanghai’s economy grew 9% in 2010

-Shanhai’s import/export volume exceeded $684.7 billion US in 2010.

-there is a tremendous disparity between the rich and poor.  Yesterday we saw 2 bed, 1 bath apartments in the central Shanghai area are selling for 10,000,000 RMB (~1.5 million USD)while 60% of the population earns less than 3,000 RMB per month (~500 USD)…

Real estate has also sky-rocketed at a rate we can’t really fathom …in the past 10 years real estate in Shanghai has increased by 400-500%. 

-HSBC actually stands for Hong Kong Shanghai Bank Corporation

-The US, Kong Kong, and South Korea are the top investors in Shanghai, the US has about5,500 projects currently and the trade between the US and Shanghai exceeded $53 billion in 2008

-And then there is the reality check – China has become a market economy…no doubt.  However…can they sustain it?  Will there be a sustain snap in government policy that reverses much of what is going on?  Will there be a social or environmental crisis that causes such economic growth to grind to a screeching halt?  Some of the most pressing issues are: 

                -social instability

                -corruption

                -rural/urban wealth gap

-migrant worker issues – these are people who head to the cities to find grueling factory work…that is significantly more lucrative than the rural farming situation they are in.  It is usually temporary.  Int the countryside they may earn about $100 USD per year…if they move to the coast and find work in a factorythey can find a job where accommodations and food are provided and earn 200-300 USD per month working 14 hour days 7 days a week.  It is temporary…but is a true chance to break their cycle of absolute poverty. 

                -social welfare

                -collapse of state-owned sector

                -“lost generation” of laid off workers

                -privatization, shedding of responsibilities

                -environmental degradation

                -pollution and resource scarcity

                -a rapidly rising middle class

Some of these are very real threat and the combination of some of these issues could be a huge blow to economic growth, so it will be interesting to see if the rapid growth pace can be maintained. 

-The AmCham also emphasized that China has a goal of becoming more well known for producting quality products and replacing its current image on chintzy stuff.  China also wants to head into the more lucrative area of production as well – into more high tech industries and even better, into research and development.  

-Some companies have been leaving Chinese factories, because they are too expensive and then heading to SE or S Asia…but then the quality is poorer and they often return to China

-The provincial EPA does not actually report to the National EPA…so there are many issues that are overlooked or not addressed appropriately.

-Because of the pressure to produce at a low cost (and keep business in China) and the lack of agencies to ensure quality control…there are still issues with quality and purity of products.

-the people responsible for the poisoned baby formula were actually executed. 

-and the American Chamber of Commerce outright admitted “ultimately everything is manufactured in China” 

After our enlightening visit with the AmCham we visited Branson factory, which is a high tech factory that is really an example fo where China is hoping to head.  Most of the employees had technical skills or were university educated engineers.

We also visited an art district that had some intriguing pieces including one with two girls in dolled-up peasant like clothing that was meant to symbolize cute communist ideology following girls, who were standing with Shanghai in the background…with one of their hands pushing/suppressing/constraining the global financial building and other sky-scrapers of the city.  The art district was fun…although despite the picture I describe it was far more commercially geared than the politically driven district of 798 in Beijing. 

Overall it was an intriguing day!

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July 18, 2011 - Shanghai - AmCham, Branson, and the Art District