Shanghai / Guangzhou - Two cities and Chinese modernity

In front of the impressive urban forest of the Pudong district, everyone can see the extent of Shanghai's new ambitions. The host city of the 2010 World Expo has undertaken a host of projects, not least the renovation of the famous Bund: it is adorning itself and preparing to become the London of Asia, the showcase of modern China.

It all began in 1992, when Deng Xiaoping decided to bring Shanghai out of the long muzzle in which it had been confined. Its cultural transformation and economic boom soon gave it a cosmopolitan character and made it a magnet for the Chinese provinces. Between 1999 and 2009, the population of Greater Shanghai rose from 14.7 million to 19 million. The city, which until the early 1930s had been Asia's leading financial centre, intends to regain its aura. In 2009, as the great business district of Pudong came into its own as an international financial centre, Shanghai became the world's fourth-largest stock exchange. The Pearl of the Orient is sparing no effort, with a flurry of decisions and new projects. Like the 2010 Universal Exhibition, the ultimate expression of this quest. It is also an opportunity to attract the world's attention... and capital.

Shanghai, the service metropolis of the future

And yet, especially in the face of the crisis, there is still more to come. While Shanghai has weathered the economic slowdown well, its rate of growth in 2009 was slower than the national average (+8.2 % compared with +8.7 %). So becoming the London of Asia remains a challenge. "To develop as a service metropolis, Shanghai needs to speed up its integration into the Yangtze basin," explains François Blanc, an adviser in Shanghai's economic department. Especially as the objectives set the bar quite high: by 2012, services should account for 60 % of the city-province's GDP. "The development of services means leaving more room for innovation and creativity," continues the economist. In this respect, Shanghai is losing ground to other Chinese cities, starting with Beijing and Guangzhou. However," says François Blanc, "legal responsiveness is better there than in other Chinese cities, particularly when it comes to protecting industrial and intellectual property. It would even seem that the professionalisation of the legal field is on the increase, as demonstrated, for example, by the fact that the time taken to register a subsidiary has been cut from one to two years to just a few months.

Shanghai is therefore focusing on several fronts. Seven in all: industry, transport, the environment, heritage, residential property, social and research facilities and infrastructure. "Infrastructure development is really the key to Shanghai's transformation," continues François Blanc. For example, the urban transport network, which has gone from 0 to 350 km in less than five years, should reach 400 km in 2010, 510 km in 2012 and 780 km in 2020, with a total of 17 lines. It was the importance attached to infrastructure that paved the way for the Expo," stresses the economic advisor, "but Shanghai is carrying the Expo rather than being carried by it. For example, a major project, the multimodal interchange hub at Hongqiao airport, has been allocated a budget of around 5 billion euros, more than the Expo budget of around 3.5 billion euros. This 26.3 km2 hub, 12 km west of the centre of Shanghai, will form a hub for road, rail and metro transport. Thanks to the Maglev magnetic levitation train, Shanghai will be connected to Hangzhou in thirty minutes, Nanjing in one and a half hours and Beijing in five hours. The hub will also accommodate 1.6 million square metres of development, including an administrative and business zone, offices, a leisure centre, residences, a high-tech business incubator and a conference centre.

Giant conference centre

By equipping itself for the future, Shanghai is at the head of the class. The world's leading port for bulk goods, second for container traffic (its capacity was increased in 2005 with the opening of the deepwater port of Yangshan), the city is also China's number one for air, freight and passenger traffic. Pudong international airport, with a current capacity of 30 million passengers a year, is expected to handle up to 80 million by 2015. But it is also in the field of MICE that Shanghai aims to distinguish itself and compete with cities such as Singapore and Hong Kong. The Pudong conference centre will soon be one of the largest in the world, not to mention the one at Hongqiao airport and the one at the World Expo site (with a surface area of 140,000 m2), which will remain in service after 31 October. "These projects are ambitious, and if Shanghai wants to become a dominant Asian metropolis once again, it will also have to overcome a conservatism that is still a little overcautious," concludes François Blanc. However, in terms of GDP, Shanghai only ranks seventh in the country (out of 31 provinces and municipalities), while Guangdong (the province of Guangzhou, Shenzhen, etc.), which contributes 12 % to China's GDP, is in first place.

Canton, ex-atelier du monde

"In 2007, Guangdong surpassed Taiwan's GDP, and the aim now is to overtake South Korea's by 2020," explains Alain Berder, head of Guangzhou's economic department. "A reform programme was launched in December 2008 to modernise its economy by adopting a development model that emphasises high-tech industries and value-added services", adds Alain Berder, adding that Guangdong is seeking to shed its image as the "workshop of the world". For the local authorities, the crisis has provided an opportunity to get rid of polluting and socially unacceptable companies. "More than 20,000 companies, most of them from Hong Kong or Taiwan, which were involved in processing trade activities, have ceased trading", says Alain Berder. The one million companies that survived are said to have emerged stronger. "The province recorded growth of 9.5 % in 2009 despite the crisis, which confirms the new role that the Chinese central authorities have assigned to Guangzhou: to become a regional economic capital in Asia", points out Alain Berder.

With a population of 12 million and a GDP of 90 billion euros in 2009, the city of Guangzhou is currently growing at a rate of 11 %. As a result, the capital of Guangdong has established itself as the new economic centre of southern China, especially as it has weathered the crisis better than other cities in the Pearl River Delta. Its secret: the importance given to services (59.2 % of its GDP) and high value-added industries (38.94 %), the launch of the Guangzhou Services brand and the establishment of local companies abroad as part of a going global policy.

To position itself in the services market, Guangzhou has developed four main hubs: the Pazhou exhibition centre (exhibitions, trade fairs and conferences), the new Tianhe business district (financial services, regional headquarters, etc.), the Baietan district (leisure and entertainment) and the Baiyun district (airport services, logistics parks, etc.). "Hosting the 16th Asian Games is also a way of positioning the city as a first-class economic centre," explains Alain Berder. As a result, the city has invested nearly €15 billion (including €3.5 billion between 2009 and 2010) in its infrastructure in preparation for November's major sporting event. While the famous 610-metre TV Tower is destined to be the new symbol of a city in the throes of a renaissance, many other projects have already come to fruition, such as the new Guangzhou airport, which opened in 2004 and whose capacity of 25 million passengers will soon rise to 50 million, and then to 80 million by 2020. As for the urban network, Guangzhou is getting a metro system that will have 14 lines by 2020, while its new station, recently inaugurated, will link Guangzhou and Hong Kong in less than an hour. Other developments include the deep-water port of Nansha, some fifty kilometres from the centre, and the extension of Guangdong's motorway network, with an additional 1,700 kilometres by 2012.

This profusion of projects, which goes beyond the 2010 sports stakes, is part of a wider process of regional economic integration in Southern China. The close links and geographical proximity between the Shenzhen Special Economic Zone and Hong Kong also play their part. "While Shenzhen's economy is based mainly on services and information technology industries, Guangzhou, the provincial capital, has favoured the development of capital-intensive industries", explains Alain Berder. Today, Guangzhou is China's third-largest automotive centre, and also plays a leading role nationally in petrochemicals, electronics, shipbuilding and cosmetics. Since the early 2000s, French companies have been setting up in Guangzhou in order to sell their products and technologies on the domestic market, often following - as in the case of SMEs - a logic of upstream integration of their former Chinese suppliers," explains Alain Berder. So when you set up in China, the idea is no longer whether you're cheaper than in France, but whether you're cheaper than your Chinese competitor". On 1 January 2010, the free trade agreement between China and the six largest countries in Asean, the Association of Southeast Asian Nations, came into force. It's a welcome opening that should finally help the French to overcome their old fears. Setting up in Southern China is a good idea for French companies, because it is in Guangdong that trade relations between China and France historically originated," explains Hervé Lambelin, Director of the French Chamber of Commerce and Industry in Guangzhou. Southern China has a more liberal tradition than the rest of the country, no doubt because of the distance from Beijing".

If the statistics are to be believed, China, which already has 600,000 millionaires in dollars, is set to add another 4,000 to 7,000 every week, or 25,000 a year. Enough to whet the appetite... And to understand that China is now the destination of choice for "global business going".
global reach.