The Rise and Fall and Rise of New Shanghai

Is history repeating itself in China's glittering global city?

See more photos of Shanghai when it was Asia's Vegas here.

The members of the Harvard Medical School Class of '08 were exceedingly ambitious -- even by Harvard standards. Not content merely to graduate from America's top med school, a small group of them set out to found an entirely new campus of their alma mater abroad. As they looked out across a world knit together by instant communications and intercontinental travel whose center of gravity was shifting to the rising Pacific Rim, there could be only one choice: Shanghai. China's financial hub and international gateway seemed destined to blossom into the leading global city of the new century. The get-rich-quick schemer's paradise that had grabbed the world's attention as an Asian El Dorado now had its sights set on becoming a cultured and cosmopolitan Paris of the East.

The year was 1909, and it took more than three weeks by ship for the Harvard doctors to cross the Pacific and make it to Shanghai. But already the city they encountered, with its Scottish opium traders, Jewish real estate magnates, Sikh police officers, Cantonese merchant princes, and pidgin-English lingua franca, was the most open metropolis the world had ever seen. Neither passport nor visa was required for entry. An introduction to the city authored in the 1920s by an American expat gushed about its worldliness: "When a traveller arrives in Shanghai to-day he is struck by the fact that to all intents and purposes he might be in a large European city [on account of the] tall buildings, the well paved streets, the large hotels and clubs, the parks and bridges, the stream of automobiles, the trams and buses, the numerous foreign shops, and, at night, the brilliant electric lighting -- all are things he is accustomed to."

But for all that, this Shanghai was a place of danger as well as opportunity: The rebellious political life it cultivated would topple China's emperors just months after the young doctors' arrival. Their own venture collapsed just a few years after its launch.

The cosmopolitan Shanghai that lured them there had been born decades earlier when, in the 1840s, the rising Western powers forced the Chinese emperor to accept the first of the "unequal treaties." Within the city limits, foreigners were exempt from Chinese law; legally it was as if they'd never left home. Soon the peculiar legal principle of "extraterritoriality" became a physical reality as Britain, France, and the United States carved out concessions from the open land surrounding Shanghai's centuries-old walled city, then a regional hub of some 200,000 people in the fertile Yangtze River delta. The settlements the foreigners built starting in 1845 looked like their home countries in miniature. The French Concession became famous for its beautiful tree-lined streets and elegant cafes, the British for its sumptuous private clubs, and the American for the bustling commerce along its main thoroughfare, Broadway. Just a decade after its creation, foreign-dominated Shanghai was China's leading international port, displacing Canton on the Pearl River. Within two decades, Shanghai was the fastest-growing city on the planet.

But for its Chinese majority, the boomtown was a deeply demeaning place to live. In the foreign concessions, Chinese, who typically worked as manual laborers (called "coolies" in pidgin English, from the Chinese kwei-li meaning "bitter strength"), were demoted to second-class citizens. Jim Crow-style segregation laws passed by the all-white Shanghai Municipal Council banned locals (and dogs) from the city's public parks. Even white-collar Chinese working for leading Western firms were forced to use Chinese-only bathrooms. For all the city's dynamism -- a dynamism to which the Chinese elite, founding their own companies and forging their own modern culture, increasingly contributed by the early 20th century -- conditions proved so humiliating that the locals ultimately formed the Chinese Communist Party, which later closed not only Shanghai but all of China to foreigners for decades.

Today, that same Communist Party, founded in Shanghai's French Concession in 1921, is guiding the city's re-engagement with the wider world, hoping to prove that Chinese-run Shanghai can be bigger, better, and more globally important than the city ever was under Western domination. Mindful of the city's complicated history, the authorities have been trying to let it breathe economically while stifling the cultural, intellectual, and political openness that made the metropolis so vibrant -- and unruly -- a century ago. But they are all too conscious of what happens when you lift the lid on Pandora's box: The hubris of the first global Shanghai took down an entire country.

That happened after Shanghai had already been open to the world for 100 years. By contrast, Shanghai's current re-engagement is still young. Lobbied hard by Shanghai Mayor Zhu Rongji and impressed by his iron-fist-in-velvet-glove management during the Tiananmen Square crisis, paramount leader Deng Xiaoping in 1990 authorized redevelopment of the city. On a visit to the city two years later, he doubled down on the project, anointing Shanghai the "Head of the Dragon," China's leading city, and supposedly uttering the exhortation "faster, faster" as he crossed a bridge between the old foreign concessions and the new downtown rising on the opposite bank of the river.

Almost overnight, the metropolis, mothballed since its 1949 "liberation," took on a momentum reminiscent of its pre-communist heyday. Having expropriated the city's land under Mao Zedong as part of the communist abolition of private property, the local authorities leased it out to real estate developers in the 1990s, raising tremendous sums for infrastructure improvements. With its newfound billions, the municipality soon built the world's greatest civic infrastructure, including a brand-new international airport linked to downtown by magnetic-levitation train, a new subway system larger than that of New York or London, and a tangle of bridges and tunnels connecting the historic center of Shanghai in the former foreign concessions to the new financial center of Pudong rising across the river.

Shanghai residents whose homes stood in the way of this government-backed progress were forcibly moved. More than a million families were evicted and rehoused in the effort to resurrect Shanghai as an international business hub. Dismissed as a white elephant or even a delusional throwback to discredited Soviet-style central planning, the reopened Shanghai was soon birthing fortunes in real estate and finance and luring top global companies, including many, like HSBC and Citibank, that had dominated the city's economy 100 years earlier. Late-1990s Mayor Xu Kuangdi's oft-mocked remark that he was purposefully overbuilding Shanghai like a savvy parent who buys an oversized suit for his growing boy came to sound prophetic. The city's stunning growth vindicated its Communist Party planners, but it also threatened to spin beyond their control.

Pudong, the sparkling new glass-and-steel downtown that Deng had exhorted to rise faster, soon dwarfed the 1920s Art Deco edifices of the foreign-built Bund directly across the river. Known for the flashiness befitting a city that went from rags to riches in just two decades, the most eye-catching of the new skyscrapers is clad in an enormous LED screen illuminated at night. Like a giant television set over a bar, it's almost impossible to look away -- regardless of what's on. One expatriate European architect compared the mismatched towers of Pudong to women's outfits at the opera, where standing out and being noticed are more important than looking tasteful or, even, good. In the opinion of one American architecture critic, the point is size, not style: "Pudong's priapic towers literally overshadow the relics on the other shore, as if lifting a collective middle finger to the West."

Beyond the city's physical structure, economic and social policies were put in place to ensure the reglobalized Shanghai would not host a repeat of the city's dynamic but demeaning -- and ultimately revolutionary -- past. In stark contrast to the days of open immigration, when neither visa nor passport was required for entry, foreign visitors and expatriates are closely monitored. They make up just 1 percent of Shanghai's population today, a far cry from unregulated, polyglot Old Shanghai, let alone today's more typical global business hubs. (New York, for example, is 37 percent foreign-born.) Rather than import millions of foreign experts to help run Shanghai's global businesses, the authorities have goosed the number of Anglophone Chinese professionals in the city by treating the municipality as if it were an elite college with a competitive admissions process: Hinterland Chinese can obtain a Shanghai residence permit by earning a degree from a national-level university and passing tests in computer literacy and English fluency.

Less-educated Chinese hoping to work in Shanghai are on a much tighter leash. Cognizant that it was the discontented proletarian masses of Shanghai who turned communist and rose up to overthrow Shanghai 1.0, today's authorities use the hukou registration system, the internal passport regime in place since the late 1950s that officially binds Chinese citizens to their hometowns, to control the new coolies building the city's muscular skyline. Rural Chinese are brought in by the millions to work in construction, only to be sent back to the countryside after their job is done. According to an official government estimate, widely regarded as a lowball figure, roughly 6 million of Shanghai's nearly 19 million people are internal guest workers. Although they often overstay their official welcome (precise numbers are never reported), ID checks and domestic immigration sweeps are common, especially before high-profile international events like the 2010 World Expo. Such humiliations breed tensions between the city's ragged, leather-skinned migrant workers and its privileged official residents marked by their cosmopolitan fashions and good health. (Official Shanghai residents now have a longer life expectancy than Americans, not to mention better school-test results.)

Wary of the days when Western companies like Standard Oil and British American Tobacco siphoned off their locally earned profits to New York and London, leaving most Shanghainese impoverished (life expectancy in the 1930s was just 27), regulations today push multinational companies to partner with local Chinese businesses. In Shanghai 1.0, the Pudong district was home to the notorious sweatshops of Western multinationals. But the garish towers of Shanghai 2.0 rise quite literally atop Old Shanghai's shame. The sweatshops now, of course, are on much cheaper real estate inland up the Yangtze -- and owned by locals. With China standing proud, foreigners, once resented as leeches and locusts run amok, are now seen as a pleasant reminder of the city's global cachet. Even the return of a modified extraterritoriality -- expatriates enjoy more freedom of worship and association than locals do -- has not become a source of tension. At least not yet.

Mindful that it was exposure to foreign ideas, the heady brew of liberalism and communism, as much as to foreign people that destabilized Old Shanghai, today's authorities keep a tight lid on the city's intellectual and cultural life, even by the strict standards of the People's Republic. At the turn of the last century, Chinese journalists in the foreign concessions, safely beyond the reach of the emperor's censors, launched China's freest press. And seizing on the republican principles of the Shanghai Municipal Council, local Chinese taxpayers in 1905 created their own elected city council, an unprecedented form of representative government in the empire. Needless to say, contemporary authorities have no intention of allowing freedom of the press or electoral democracy in Shanghai today. Notably, Chinese authorities tar such human rights with the pejorative term "global values" (meaning: not ours), dismissing them as irrelevant -- even to China's most proudly global city.

Even less overtly political ideas from abroad are monitored and controlled. United Artists, MGM, and Warner Bros. all had major offices in 1930s Shanghai; today only 20 foreign films a year are permitted to be screened in all of China. And for all the international flights landing at Shanghai Pudong International Airport, which opened in 1999 and already has annual passenger traffic comparable to New York's JFK, Shanghai is far less open to foreign culture now than it was back in the Roaring Twenties. In those days, top jazz musicians from New York, New Orleans, and Chicago were in residence in the city's famed nightclubs. But ever since 2008, when Björk shouted "Tibet! Tibet!" from a Shanghai stage during a performance of her song "Declare Independence," local authorities have subjected touring artists to strict scrutiny. In 2009, the nascent Shanghai Fringe Festival -- an offshoot of the low-budget, high-ambition live-arts festival that takes over Edinburgh, Scotland, each year -- was forced to move its international performances to smaller peripheral cities because, as the organizers complained, the Shanghai government had "some nonsense issues." Chinese performers find the Shanghai cultural commissars particularly meddlesome. As Zhang Shouwang, the lead singer of Beijing rock band Carsick Cars, told me after a gig on his U.S. tour, "Shanghai is more restricted than Beijing.… Once, when we played there, someone called the police. That kind of thing always happens in Shanghai."

Turning down the volume on all forms of free expression is part of a bid to build a Shanghai that is seen rather than heard. The goal is a city that imports all manner of global commodities without the dreaded "global values." For the modern rulers in stodgy Beijing, the ultimate aim of Shanghai 2.0 is a sparkling model metropolis (The fastest train in the world! More skyscrapers than Manhattan!) to vindicate the top-down system that built it.

As one top reform-era Politburo member explained with uncharacteristic candor, the resurrection of Shanghai is best understood as a bid to make up for the Communist Party's Maoist-era mismanagement of the city -- a record of folly that called into question the party's right to rule. "Before liberation," former Premier Zhao Ziyang wrote in his memoir, "Shanghai was a highly developed metropolis in the Asia Pacific Region, more advanced than Hong Kong, let alone Singapore or Taiwan. But after a couple of decades, Shanghai had become run-down and had fallen far behind Hong Kong, Singapore, and Taiwan. This made people ask, What exactly is the advantage of socialism?"

Today, China's new mandarins hope that Pudong's skyline is the answer.



Cities of the Future: Made in China

From traffic-jumping buses to electric taxis, China is at the forefront of the world's flashiest urban innovations.

For much of the 20th century, the world looked to American cities for a glimpse of the future. Places like New York and Chicago had the tallest skyscrapers, the newest airports, the fastest highways, and the best electricity grids.

But now, just 12 years into the Asian Century, the city of the future has picked up and moved to China. No less than U.S. Vice President Joe Biden recognized this when he said not long ago, "If I blindfolded Americans and took them into some of the airports or ports in China and then took them to one in any one of your cities, in the middle of the night … and then said, 'Which one is an American? Which one is in your city in America? And which one's in China?' most Americans would say, 'Well, that great one is in America.' It's not." The speech raised eyebrows among conservative commentators, but it points out the obvious to anyone who has spent time in Beijing, Hong Kong, or Shanghai (or even lesser-known cities like Shenzhen and Dalian, for that matter).

In these cities, visitors arrive at glittering, architecturally arresting airports before being whisked by electric taxis into city centers populated by modular green skyscrapers. In the not-so-distant future, they'll hop on traffic-straddling buses powered by safe, clean solar panels. With China now spending some $500 billion annually on infrastructure -- 9 percent of its GDP, well above the rates in the United States and Europe -- and with the country's population undergoing the largest rural-to-urban migration in human history, the decisions it makes about its cities will affect the future of urban areas everywhere. Want to know where urban technology is going? Take the vice president's advice and head east.

Modular skyscrapers

If the speed of China's rise has been astonishing, it's about to get even faster. A Chinese construction firm has pioneered a modular construction technique that allows it to build energy-efficient skyscrapers in a matter of weeks, dramatically reducing construction costs and waste. This year, Broad Group will put that approach to the ultimate test when it builds a 220-story skyscraper -- to be the world's tallest -- in a mere 90 days in Changsha, in southeast China. (The world's current tallest building, the more than 160-story Burj Khalifa in Dubai, took six years to complete.)

Although the feat might sound far-fetched, Broad has proved itself capable in a series of trial runs. This past December, it completed a 30-story hotel near its headquarters in Changsha in just 15 days. The approach utilizes prefabrication -- 93 percent of the work on the hotel took place in a factory -- resulting in 1 percent of the waste of a normal building project. Also, by assembling large portions of the building beforehand, engineers can seamlessly integrate green features into the structure, such as thermal insulation and electricity-generating elevators. Already, Broad says it has franchised its methods to six Chinese companies and is in talks with two companies abroad.

A traffic-jumping bus

The Chinese bought 14.5 million cars in 2011 -- a figure that could increase to 50 million annually within a decade -- leading to massive congestion on China's roads. (A recent jam outside Beijing lasted 11 days.) Given these traffic woes, it's a wonder someone didn't think of the 3D Express Coach sooner. The premise is simple: If you can't go through gridlock, why not slide over it?

Known as the "straddling bus," the arch-shaped vehicle operates like a game of croquet, but one in which the wickets move over the balls. Developed by Shenzhen Huashi Future Parking Equipment, the bus can carry up to 1,200 passengers in a carriage straddling a two-lane street, allowing traffic below to flow freely (or not, if it's rush hour). The company claims the vehicle will reduce traffic jams by up to 30 percent, and because it doesn't require a tunnel or elevated track, it's 90 percent cheaper to build than a subway or monorail. The bus saves more money by generating electricity through solar panels mounted on its roof and at stops.

Electric taxis

Hoping to become the global leader in electric vehicles, the Chinese government wants 500,000 electric and plug-in hybrid vehicles on China's roads by 2015, and more than 5 million by 2020. It is already backing these aspirations with a range of subsidies, including up to $8,800 for every electric vehicle purchased by taxi companies and local governments.

As a result, China has more electric taxis in operation than anywhere in the world and is likely to extend its lead. On Beijing's outskirts, electric Fotons ferry passengers to and from the Great Wall. In the southern city of Shenzhen, which has the world's largest fleet of zero-carbon taxis and buses, cabbies drive hundreds of e6s, electric cars manufactured by Warren Buffett-backed automaker BYD. Shenzhen's government wants 24,000 electric vehicles on the city's roads and 12,750 charging stations by the end of this year. But those plans might have to be put on hold following a fatal crash involving an electric taxi in May -- the battery may have been at fault -- though safety worries in China rarely get in the way of ambitious government projects.

Safer, cleaner nuclear energy

Frustrated by electricity shortages in many of its cities, China is racing to develop nuclear technology fueled by thorium, which some energy experts predict will revolutionize an industry racked by safety concerns following Japan's Fukushima meltdown in 2011. Compared with the global standard of uranium, thorium is more abundant in nature, doesn't cause meltdowns, and produces less radioactive waste, making it a more attractive option for filling China's electricity deficit (though detractors warn that it is untested on a commercial scale and still has significant safety and waste problems).

Ironically, the United States pioneered thorium research during the Cold War before abandoning it in the early 1970s because of its limited use in making weapons. China (along with France, India, and Norway) has now picked up that early research and aims to become a global leader in thorium innovation. China is building 40 percent of the world's new nuclear plants, and if it masters thorium -- work on the country's first prototype plant is scheduled to be completed as soon as five years from now -- the technology is sure to play a major role in the government's plans to increase its nuclear power supply by 20 times over the next two decades and lessen its dependence on coal.

Bullet trains

With the world's longest network of tracks and some of its most advanced trains, China's high-speed rail system effortlessly evokes the future. But the country's latest innovation takes unlikely inspiration from the past. Shaped like an ancient Chinese sword, China's newest bullet train slices through the air at a maximum speed of 311 miles per hour, capable of traveling from Beijing to Shanghai in less than three hours and four-and-a-half times faster than the average speed of trains plying Amtrak's busy Boston-Washington Acela route (where speeds are limited by conventional train traffic).

In the future, trains like this might also be able to dart from city to city without even having to stop for passengers. Designer Chen Jianjun has dreamed up a system of pods that slide on and off the tops of trains in transit, loading and unloading passengers at high speed without the train actually stopping, which currently adds two-and-a-half hours to the journey from Beijing to Guangzhou. And with China's rail industry continuing to push the speed envelope -- researchers at Southwest Jiaotong University are working on a maglev-style train that shoots passengers through tubes at more than 600 miles per hour -- innovations like these might just make air travel a thing of the past.

The world's newest airports

Nowhere is China's ability to rapidly and efficiently build infrastructure more apparent than in civil aviation. From 2005 to 2010 alone, the Middle Kingdom built 33 airports and renovated or expanded an additional 33, at a cost of nearly $40 billion. This dizzying pace is set to continue over the next three years, when China will build another 70, including a mega-airport in Beijing -- the city's third -- that will have as much as double the annual passenger capacity of Atlanta's Hartsfield-Jackson, currently the world's busiest.

All this has transformed intercity travel in China, effectively shrinking a country that until recently relied heavily on trains and buses. Airlines are rapidly expanding their domestic networks (though traveler demand has not always kept pace with supply, as evidenced by the $57 million airport built five years ago in Guizhou province, which saw just 151 paying passengers in all of 2009).

China's airports also feature the latest industry advancements, including green technology, automated immigration lines, and cutting-edge explosives detectors. Passengers have taken note: China has two airports on Skytrax's influential World's Best Airports 2012 list -- more than any other country.

Solar power -- by the gigawatt

In 2010, China surpassed the United States to become the world's largest energy consumer. To meet its seemingly limitless electicity needs, China is turning to its solar industry, which already leads the world in panel production, and gearing up to produce gigantic solar plants.

A solar farm capable of generating 1 gigawatt of power is planned in Datong, a city in Shanxi province known for its coal reserves, while in Inner Mongolia a Chinese firm and an American company have teamed up to build a solar plant capable of cranking out 2 gigawatts, making it the world's largest, with double the capacity of most active U.S. nuclear reactors. Hong Kong-based China Merchants Group, meanwhile, is building a 500-megawatt solar farm with panels mounted solely on roofs, rather than on the ground, the industry standard. The company will use 32 million square feet of roof space, alleviating concerns about the environmental impact of land-gobbling conventional solar farms.

Reinventing garbage

As China's major cities swell in size, their residents are creating mountains of waste that ring urban areas, with Beijing alone generating 18,000 tons of garbage every day, enough to fill 29 Rose Bowls each year. In response, Chinese companies are developing cutting-edge recycling technology that could soon render landfills and incinerators obsolete -- or at least much less common.

Goldenway Bio-Tech in Beijing has developed a system that can transform up to 400 tons of food waste per day into fertilizer. The odorless process uses a specially manufactured enzyme that breaks down waste in just 10 hours, resulting in a brown powder Goldenway says is ideal for growing organic crops. The company operates 10 such plants throughout China, though it encountered resistance from residents worried about health problems and foul smells when it unveiled plans for a facility in Beijing.