Pudong’s Reform Miracle
During his visit to Lincoln High School in Tacoma, Washington in 2015, Chinese President Xi Jinping suggested local students visit Shanghai to witness the changes of China over the past century.
Indeed, the development of Shanghai over the past 100 years mirrors the tremendous changes of the nation in modern times, which had never before been seen across Chinese history.
In 1843, Shanghai, then a small coastal county, opened to foreign trade according to the Treaty of Nanjing and the General Regulations for Trade at Five Treaty Ports after the Opium War, taking the first steps of a journey that would culminate in the city emerging as the most prosperous metropolis in the Far East.
In 1921, the First National Congress of the Communist Party of China (CPC) was held in the French Concession in Shanghai, marking the birth of the CPC. From that point on, Chinese people under oppression kindled hope for liberation, and the Chinese revolution entered a new stage.
In 1937, the Battle of Shanghai broke out, and the city became a battlefield to fight Japanese invaders. The city hosted one of the largest and fiercest battles during the Chinese People’s War of Resistance against Japanese Aggression. The tenacious resistance of the Chinese people upended the Japanese army’s plan to “conquer China within three months.”
In 1949, Shanghai witnessed the end of old China. Elderly Shanghai natives still remember troops of the People’s Liberation Army (PLA) sleeping on the streets for three nights to avoid disturbing local residents as they liberated the city that year.
Shanghai continues to showcase China’s development over the past century, and Pudong mirrors Shanghai’s tremendous changes over the past four decades since the beginning of China’s reform and opening up in the late 1970s.
In 1990, the CPC Central Committee and the State Council of China, seeking to promote overall reform and opening up of the country, made the important decision to open Shanghai’s Pudong area. A saying goes that “Shenzhen led China’s reform and opening up in the 1980s, and Pudong took the relay baton in the 1990s.” In this context, Shanghai shifted from a “line of defense” of the nation’s reform and opening up to a “striker.”
A New Window to the World
The Puxi area in Shanghai was already prosperous in the early 20th century, but Pudong remained a vast expanse of farmlands and reed marshes dotted with a handful of dilapidated factories and residences as recently as the late 20th century. As a saying prevalent in Shanghai during the 1980s goes, “A bed in Puxi is better than a house in Pudong.”
Historically, after Shanghai opened to foreign trade, Western colonists continued expanding their settlements in the city, but none ventured to develop the Pudong area across the Huangpu River. Puxi enjoyed increasing development while Pudong was left far behind.
After the founding of the People’s Republic of China in 1949, the CPC led the Chinese people in promoting the construction of New China. Before 1990, Shanghai, dubbed the “eldest son of China’s economy,” contributed one-sixth of all national revenues. After paying such massive sums to the national treasury, the remaining revenues of the local government of Shanghai could only afford minimal expenditures in urban construction. Consequently, Shanghai lacked funds for infrastructure, which resulted in problems such as insufficient housing, traffic congestion and environmental pollution. The city once known as “Paris of the East” suffered a decline.
In 1978, China implemented the reform and opening-up policy. Starting in 1980, the Chinese government decided to establish five special economic zones (SEZs) on the southeast coast of the country, such as Shenzhen SEZ, which led to remarkable achievements. As neighboring countries and regions consecutively embarked on missions of rapid development, Shanghai lost its past glory as a major metropolis in the Far East, and its role shifted from a star to a benchwarmer in China’s economic development game.
By the end of the 1980s, the global political landscape had changed drastically. The collapse of the Soviet Union and the drastic changes in Eastern Europe dealt a blow to the development of socialism around the world, posing new challenges for China’s reform and development. The West began to turn a skeptical eye to China’s economic reform.
Sensing changes in the international situation, Deng Xiaoping, the chief architect of China’s reform and opening up, urged the country to open its door wider to the world to boost domestic reform and opening up.
Early in 1990, Deng visited Shanghai. An enthusiastic bridge player, he dubbed Shanghai China’s “trump card” and believed that the city’s development could provide a “shortcut” for the whole country’s development. “We must invest all our strength in the plan to develop Pudong until it succeeds,” Deng stressed.
Deng sought to make Pudong a banner of China’s further reform and opening up, which would demonstrate the nation’s determination and confidence to consistently promote its reform and opening up.
Based on Deng’s initiative, the Chinese government took prompt action to formulate a strategic plan for the development and opening up of Pudong. On April 18, 1990, the CPC Central Committee and the State Council of China announced a plan to develop and open Pudong. This announcement elevated the development and opening up of Pudong to a national key strategy. The municipal government of Shanghai then released a guideline to “develop Pudong, rejuvenate Shanghai, serve the nation, and open arms to the world.”
This heralded the beginning of Pudong’s development and opening up. Shanghai seized the historic opportunity in the last decade of the 20th century to again ride the tide of China’s economic reform.
From 1990 to 2000, when it officially became an administrative district of Shanghai, Pudong New Area witnessed tremendous changes and created many “firsts” of the nation: the first finance and trade zone, the first export processing zone, the first bonded zone, the first foreign-funded bank and the first foreign-funded insurance company. Not only did its economic strength expand rapidly, but also it paved the path for China’s entry into the World Trade Organization.
The development of Pudong injected impetus into the whole nation’s reform and opening up, opening a new window to China for the world.
Pooling Global Wisdom through Dialogue
How should Pudong develop? At the time, there wasn’t any logical precedent. But the Chinese people solved the problem with transcendent vision. Shanghai formulated the guiding principle of “seeking development oriented to the Pacific and the future,” and the planning of all relevant infrastructure projects followed the principle.
While developing the Pudong area, Shanghai has maintained a modest attitude and continued learning from the world. Lujiazui was one of the earliest examples of the city’s efforts to pool global wisdom.
Now an international financial hub featuring countless skyscrapers, Lujiazui is home to an impressive concentration of financial institutions from around the world. Its bustling streets are not unlike Wall Street. As the central business district of Shanghai, Lujiazui rivals the Square Mile of London and Manhattan in New York City. It is also the first finance and trade zone in China.
Few can now imagine that the area was formerly a small road named Lannidu (literally, “Muddy Ferry”). World-renowned architects from China, Britain, France, Japan and Italy were invited to design the Lujiazui finance and trade zone. The design by Japanese architects, which resembles a printed circuit board assembly, boasted a strong modernist sense. The design by architects from Italy, the cradle of the Renaissance, resembled an ancient oval-shaped castle. The design by romantic French architects featured an abstract, simple artistic touch, forming a sharp contrast with classical buildings on the Bund, a waterfront area in central Shanghai. The design by scrupulous British architects combined tradition and modernity. The design by Chinese architects emphasized the function and development potential of the axis of the area.
After 17 rounds of discussions and modifications within two years, the final blueprint for the construction of Lujiazui was completed. It was the first time that China carried out specific international consultations and pooled global wisdom for the planning of a development zone.
In addition to Lujiazui, many landmark buildings in Pudong are fruits of global wisdom. Many architects from around the world were invited to design structures there. For instance, the Shanghai Pudong International Airport that resembles a huge bird with outstretched wings and the Shanghai Oriental Art Center that appears like a blooming magnolia flower were both designed by renowned French architect Paul Andreu. The Shanghai New International Expo Center was designed by a German architect. And the 1.4-square-kilometer Century Park that fuses Chinese and Western cultures was designed by a British architect.
Pudong has not only introduced funds and technologies from around the world, but also pooled global wisdom. Its active dialogue and transcultural exchange with the world are the internal drivers of Pudong’s speedy development.
A slogan translated as “Think over the development of Pudong while standing beside a terrestrial globe” was hung in the dining hall of the “commanding headquarters” for the development and opening up of Pudong located at 141 Pudong Avenue. The slogan was attributed to Zhao Qizheng, then vice mayor of Shanghai and director of the Administrative Committee of Pudong New Area. He explained that this slogan aimed to encourage all officials in Pudong to have global vision and an internationalized way of thinking and formulate and implement globalized strategies.
“Pudong is embracing the world with its development,” remarked Zhao. “In terms of function, it aims to become an internationalized economic hub, so it needs market entities as well as investment, experiences and achievements from around the world. Thus, we should observe Pudong from a global perspective, rather than the perspective of Shanghai.”
Facing the Pacific Ocean to the east, Pudong opens arms to the whole world and thinks over its development while standing beside a terrestrial globe, so that its development and opening up has gradually enabled Shanghai to be ranked among modern international metropolises together with New York City, London, Frankfurt, and Tokyo.
Pudong has opened a new window to the world.
Test Field for System Innovation
During his inspection tour to Pudong, Chinese President Xi Jinping surmised that the significance of Pudong’s development and opening up is its demonstrative role as a window of China to the world, its enterprising and pioneering spirit and its function as a vanguard and test field.
The courage to conduct unprecedented experiments is the calling card of Pudong. Throughout the history of its development and opening up, Pudong is responsible for a number of Chinese “firsts.”
In 1990, it established the country’s first finance and trade zone (Lujiazui Finance and Trade Zone), the country’s first export processing zone (Jinqiao Export Processing Zone), the country’s first bonded zone (Waigaoqiao Bonded Logistics Park) and the country’s first stock exchange (Shanghai Stock Exchange).
In 1995, China’s first retail joint venture approved by the State Council, Shanghai No.1 Yohan Shopping Mall Co., Ltd., settled in Pudong.
In 2005, Pudong became the first to carry out pilot comprehensive reform in China.
In 2013, China (Shanghai) Pilot Free Trade Zone, the first of its kind in the country, was established in Pudong.
In 2015, Pudong became the first to carry out the pilot reform of “separation of business licenses and government permits” in China.
In 2018, China Oil Futures, the country’s first internationalized futures product, began trading on Shanghai International Energy Exchange, a subsidiary of Shanghai Futures Exchange, in Pudong.
On September 29, 2013, China (Shanghai) Pilot Free Trade Zone was officially inaugurated. Covering 28 square kilometers in Pudong, about 1/266 of Shanghai’s total area, this free trade zone is expected to boost another round of Chinese reform.
Alongside the pilot comprehensive reform, the Chinese government established its first pilot free trade zone in Pudong because of its advantageous system foundation, opening up and strategic position. The government hopes Pudong can serve as a test field for upgraded reform of China’s economy.
Li Qiang, secretary of the CPC Shanghai Municipal Committee, wrote in an article that based on the requirements laid out by the CPC Central Committee, the city is focused on system innovation and taking bold and active measures to explore the establishment of an institutional system to meet the highest-level international standards and align with international investment and trade rules and coordinate promotion of innovation in investment management, trade facilitation, financial opening, and government regulation systems to explore new paths and accumulate new experiences to comprehensively deepen China’s reform and opening up and create a new system of an open economy.
The most noticeable achievements China (Shanghai) Pilot Free Trade Zone has made over the past five years since its establishment include more than 100 system innovations that can be replicated and disseminated, such as the “negative list” management mode. In addition, by deepening the reform of separation of business licenses and government permits, the position of enterprises as market and investment entities has been further consolidated. The free trade zone has established a trade regulation system that conforms to high-standard trade facilitation rules, enabling all procedures concerning cargo and shipping declaration to be handled at the same counter. It has also opened more free trade accounts, carried out system innovation in fields like preventing risk in an open environment, exploring specific paths for clarifying the relationship between the government and the market and optimizing the business environment.
According to the plan to comprehensively deepen reform and opening up of China (Shanghai) Pilot Free Trade Zone issued by the State Council in March 2017, free trade port areas will be set up in special customs supervision areas such as Yangshan Bonded Port Area and Pudong Airport Comprehensive Bonded Area. This plan has been hailed as Version 3.0 of the reform of China (Shanghai) Pilot Free Trade Zone.
Later, the report to the 19th CPC National Congress called for “granting more powers to pilot free trade zones to conduct reform and exploring the opening of free trade ports.”
Through deeper reforms, Pudong is getting a whole new look.
Legend in the New Era
In the eyes of Weng Zuliang, Party secretary of Pudong New Area and member of the Standing Committee of the CPC Shanghai Municipal Committee, the key to building free trade ports is to meet the highest global standards for opening up and present Chinese solutions for the world.
This requires a change in the government’s function. The government should play a “guiding” and “serving” role. On January 1, 2016, China (Shanghai) Pilot Free Trade Zone led the nation by kicking off a pilot program on the reform of separation of business licenses and government permits. Through the implementation of the pilot program, 116 former administrative licensing items have been canceled or replaced and a notification and commitment system has been implemented. Measures have also been taken to increase the transparency and predictability of administrative licensing and strengthen market access supervision.
This year, the State Council approved the nationwide implementation of the reform of separation of business licenses and government permits and assigned Shanghai and Pudong 47 new tasks across 10 realms. Pudong has promised to accomplish the missions with haste and maintain the “speed of the free trade zone.”
In February 2016, the National Development and Reform Commission and the Ministry of Science and Technology approved Shanghai’s plan to build a comprehensive national science center at Zhangjiang in Pudong, a key measure and core task for the city to become a scientific and technological innovation center of global influence.
Zhangjiang now fosters scientific and technological innovations daily, many of which have stunned not only Shanghai and China but the world at large. Currently, Zhangjiang is home to four Big Science facilities including Phase I of Shanghai Synchrotron Radiation Facility, National Center for Protein Science, Shanghai X-Ray Free-Electron Laser Test Facility and Phase I of Shanghai Supercomputer Center. These facilities are indispensable testing platforms for a variety of frontier science research.
Technological innovation has injected the vitality to shift the local economy from high-speed growth to high-quality development. In 2017, the added value of Pudong New Area’s secondary and tertiary industries accounted for 25.1 percent and 74.7 percent of its GDP, respectively. The growth rate of the secondary sector was higher than that of the tertiary sector, with strategic emerging industries contributing 40.9 percent of the total output of industrial enterprises above designated size. By the end of 2017, the number of high-tech enterprises in Pudong had reached 1,711, the number of patents owned by per 10,000 population hit 55, and authenticated incubators and makerspaces amounted to 134.
A drop of water mirrors the brilliance of the sun, and similarly, the development of a place may reflect the development of a nation. As a witness of China’s 40 years of reform and opening up, the miraculous development of Pudong New Area over the past 28 years fully demonstrates that establishing SEZs and new areas is the right solution for economic development, that promoting the reform and opening up under the leadership of the CPC is the right choice for the country, and that socialism with Chinese characteristics is the optimal road.
China’s reform and opening up created the Pudong miracle, which will only continue into the future.