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Week In China: Shanghai's Building Boom
BBC NEWS, CHINA
October 30, 2012: As China prepares for a new generation of leaders to take power, the BBC is spending a week on the road looking at both the challenges ahead for the world's most populous nation and the advances it has made.
On day three, the BBC's John Sudworth reports from Shanghai, where the skyline is testament to China's economic boom in the last decade.
Day Three: Shanghai's building boom
If China's leaders could choose one image to symbolize their decade in power, then the Shanghai skyline might do. The iconic cityscape on the Pudong side of the river was already a work in progress in 2002, but since then it has continued to rise, the gaps filled in with more real estate, more high rise office accommodation, more concrete and steel.
Shanghai's own building boom, just like China's in general, has provided jobs for millions of workers. And the city's role as a financial hub and engine of growth has pushed per capita income well above US$12,000 (£7,500) a year.
As a face to show to the world Shanghai is modern, vibrant and outward looking, and for China's economic policy makers, there is much to be proud of here.
But Shanghai is also a symbol of modern China in another important way too. I recently interviewed an estate agent, standing on one of the upper floors in one of those luxury apartment buildings in Pudong. The property, with a sweeping view of the river, was on the market for a US$2.5m price tag, and I asked the estate agent if he ever worried about the growing gap between rich and poor. "I think the gap is obviously getting bigger and bigger," he said, "and some poor people are trying to make something out of it." "But fortunately," he went on, "we have a very strict and very powerful government who are trying to control everything and calm things down."
That China's leaders are concerned about growing social unrest is well documented and that they are likely to contain it, even as economic growth slows, is for now widely accepted. But some economists have been wondering whether China's system of strong government may actually be one of the root causes of inequality in the first place.
One of the main engines of this economy's extraordinary growth over the past decade has been massive government spending on big infrastructure projects. The other engine, of course, has been exports.
But while government spending pumps up GDP, it is also the kind of wealth that is captured by the big state-run companies and the already wealthy elites, rather than ordinary Chinese households.
"China has now come to a critical turning point," said Gary Liu from the China Europe International Business School. "Big government is becoming the problem, not the solution, because it is too powerful, controls too many resources, creates distortion in the economy and is stifling the innovation of enterprise," he added.
If large numbers of people are shut out of the economy as consumers because they are denied a share of the wealth, the argument goes, then China will struggle to build a more balanced economy in which domestic demand plays a greater role.
And while China prepares to anoint its new generation of leaders, in Shanghai it is not hard to find people who are too poor to consume. Lou Liping, 51, lives in a tiny one-room apartment within sight of the Pudong skyline. She shares a bathroom and kitchen with her neighbors, and she is waiting for the old, damp building to be torn down in the hope of getting enough compensation to buy a new home. "I hope they do it soon," she said, "because I'm worried that the price of property is still going up."
