Expo's history, now what's the future?

08:39, February 22, 2011      

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For years, preparation for World Expo 2010 dominated the development strategies and prosperity dreams of Shanghai. Now that the heady spectacle has passed into history, some are wondering if the city isn't finding itself a bit off-stride.

The question is an interesting one: Whither Shanghai?

There's no doubt that the city remains among the most vibrant in the nation, if not the world. But in the post-Expo era, the city needs to redefine itself and chart its course through the shifting sands of a rapidly changing and highly competitive environment.

Last year, even with Expo in full swing, the city's gross domestic product expanded at a slower pace than China as a whole for the third year running.

Economic growth in the city trailed many poorer inland provinces that provided the cheap labor for Shanghai's export-driven industries and are now trying to emulate the city's success story.

Shanghai GDP last year expanded 9.9 percent from 2009 to 1.68 trillion yuan (US$256 billion), while the national growth was 10.3 percent.

Cai Xuchu, chief economist at the Shanghai Statistics Bureau, said what appears to be a slower growth rate is merely a reflection of the city's high base.

"Shanghai was expanding at double-digit rates for more than a decade, until 2009," Cai said. "It is almost impossible to repeat that miracle. What Shanghai needs to focus on right now is economic restructuring. An exorbitant growth speed is no longer the most important thing."

Other provinces

In 2010, Shanghai's economy was the slowest growing among the top 10 provincial-level economies in China, as provinces in central and west China revved up their development engines.

Sichuan Province in the southwest headed the growth charts with an expansion of 15.2 percent, while the 4.55 trillion yuan value of goods and services in the southern province of Guangdong was triple Shanghai's.

It may be fussy to look at cold figures and try to draw conclusions about Shanghai's situation, but the numbers do point to traces of weakening growth.

What could that tell us?

For one thing, competition for cheap migrant labor may intensify between wealthy eastern seaboard cities like Shanghai and interior areas of the country with faster growth rates.

Spurred by government incentives and lower production costs, many companies are moving their manufacturing facilities to inland areas. That means many migrants now working in Shanghai might find jobs much closer to their hometowns and families.

Who's to say that skilled labor and professionals who came to Shanghai from far and wide to take advantage of job opportunities won't follow?

According to the local statistics bureau, the average disposable income of urban residents in Shanghai rose 10.4 percent last year to 1,838 yuan, but that gain trailed the 11.3 percent national average.

With inland provinces nipping at the city's heels, Shanghai has embarked on a strategy of moving away from traditional dependence on export-oriented industries in favor of transforming itself into a global financial hub to rival New York or London. It is also seeking to make the city a mecca for advanced technology research and development.

But turning vision into reality is a slow and sometimes tricky process.

Shanghai, which is already considered China's financial hub, certainly has the potential to catapult its financial services sector into the global big league, according to Fang Xinghai, director of the Shanghai Financial Services Office.

But Fudan University economics professor Sun Lijian points out that the city's ambitions are hobbled for the moment by the limited convertibility of the yuan and by an urgent need to introduce more innovative financial products, such as derivatives. Both moves are controlled by the national government.


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