Shanghai looks to follow in Hong Kong's footsteps
June 23, 1997
Web posted at: 8:45 p.m. EDT
From Correspondent Andrea Koppel
SHANGHAI, China (CNN) -- In the years before China's
Communist revolution in 1949, Shanghai was one of the premier
cities of Asia. But over the following decades, tables turned
and it was Hong Kong, not Shanghai, that surged ahead as a
world-class commercial center.
With an eye on the phenomenal success of Hong Kong, Shanghai
has been trying to remake itself in recent years as a Hong
Kong wannabe, with a vibrant port, an active stock exchange,
cheap labor and a booming local economy.
Now, with the July 1 handover of Hong Kong from Britain to
China just around the corner, one question on the minds of
many in Shanghai and abroad is how these two cities will
interact in the future. Will they be collaborators or
"Hong Kong and Shanghai will be China's most economically
important cities," predicts Zhao Qizheng, the vice mayor of
Shanghai. "It's like two street lights at different ends of a
road, each in charge of its own area. If both are lit, then
the road is very easy to travel."
"The [people of Shanghai] certainly have it in their minds
that they would like to regain that relative position between
Shanghai and Hong Kong," says John Crossman of the firm
Jardine Fleming Shanghai.
Since 1990, the local government in Shanghai and China's
central government have both been pumping money into a
special economic zone in east Shanghai. They've been
encouraging banks and businesses to move to the city in the
hopes that it will become, like Hong Kong, a regional hub of
Shanghai's infrastructure is among the best in China. That,
in turn, is attracting more and more overseas
investment -- the bulk of which, in a bit of irony, is coming
from and through Hong Kong.
"We inject more time and money into Shanghai," said Stephen
Yuen, a Hong Kong businessman. "We expect that the return
will be better. We see the future of Shanghai looking much
brighter than other cities in China."
Brighter, perhaps, but analysts say Shanghai won't eclipse
Hong Kong anytime soon. For now, Shanghai's greatest
assets -- its cheap labor, cheap land and lower cost of
living -- are not enough to challenge Hong Kong's strengths.
"Shanghai is a very heavy industrial city that in about five
to 10 years they're going to have to convert to a transport
city, a service city," says Crossman. "If they can do that,
then this place will take off."
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