Editor’s Note: Thirty years ago, the development of Shanghai’s Pudong New Area was a major breakout for China against the complicated international environment, the lack of international understanding, and the inappropriate systems. It was also a new start for China to better understand the world. Such a breakout needed imagination, wisdom and courage. And Zhao Qizheng has all the capacity needed to build Pudong’s success. As a former vice mayor of Shanghai and the first director of the administrative committee of Pudong New Area, Zhao shared his experience in Pudong’s development at a seminar on high-quality urban development co-organized by China Internet Information Center (China.org.cn) and Cloud River Urban Research Institute on June 11, 2019.
When Pudong’s plan was first announced in April 1990, the Western mainstream media did not think China could do it. They believed China was just making a political statement but nothing serious about reform and opening-up. So we needed to better present China’s projects like Pudong to the world.
Pudong was little known back then. Most Beijingers hadn’t heard of it and it was not even shown in Shanghai’s map. As we introduced Pudong during our presentations and talks with foreign people, it became better known in the outside world. Dr. Henry Kissinger was the first to have found out that we’re serious about developing Pudong. Since he stepped down as the US Secretary of State, Dr. Kissinger has been working as advisers to US companies operating in China. During each trip to China, he would stop by and talk with me in Shanghai for a couple of hours. After I explained our plan in detail, he asked me some simple but important questions: Will China continue with its reform and opening up policy? Is the policy risky or stable? How’s renminbi going? Which city is most promising in reform and opening up? What industries can the US businesses try on?
We invited the best teams both at home and from the UK, Italy, Japan and France to help us design for the project. The initial designing requirement was very simple, but the Shanghai team turned out to have delivered a worst plan. Designs from overseas teams made sense in each of their own way and helped expand our horizons. In addition to the five plans designed by those teams, we came up to the sixth one after drawing on advantages from those five. After we had introduced our plans to Dr. Kissinger, he was sure that we really wanted to do something.
In 1996, pile drivers and cranes were seen everywhere in Pudong. The United States estimated that the cranes used in China’s Pudong accounted for 17% of the world’s total. I didn’t find the original description but many foreigners came to ask me if it was true. The Boston Globe wrote a long article after talking with me when I was Shanghai’s vice mayor. In that article, I was described as someone sitting on an old-fashioned couch, explaining to the journalist Pudong’s ambitious plan with new multimedia techniques. It wrote, if the plan could be fulfilled, China would not only be a political and military power but also an economic power, and everyone should fear about it. The article also went with an illustration featuring a pair of chopsticks picking pieces of paper bearing the U.S. flag. I wrote a letter to the newspaper saying that I did not agree with the writer’s opinion and that China never has the history of consuming any other country as a small dish. They published my letter and added a title to it, meaning that China does not take the law of the jungle. They were willing to share different opinions instead of a one-sided statement.
The biggest difficulty in Pudong’s early development was how to build a modern city. Back then, there was no “Comprehensive Development Index of China’s Cities” complied by Cloud River Urban Research Institute that we could look up to. We just thought that Pudong should be something new and different from the other five new areas in China. Pudong is totally not an economic and technological development zone, or a science park, or a cultural and creative zone, but a new urban area as part of a modern city.
Pudong covers a large space. How should Pudong position itself? At that time, people were already talking about economic globalization. So we started to plan for its development beside a globe, in the hope of building it into a major international city with strong economic influence.
An international city should be a hub for international trade, international financing, information exchange and international transport. Back then, no Chinese city can be compared with international cities like Paris, New York, London, Tokyo and Singapore. Our GDP was very low and could not even make a stable international call. We once had a phone call test. For every 95 international phone calls made from New York city, only one could not get through; while for every 100 international phone calls made from Shanghai, only five could get through. This was an example as to why Shanghai could not be called as an international city. I even consulted with AT&T about telecom modernization.
China has a vast territory with a lot of regional differences. As special economic zones and new areas in the coastal region were granted privileged policies, there were some criticisms. Dr. Kissinger asked me why special economic zones were only found in developed regions instead of developing ones. I gave him an example: for the same amount of wheat planted, Pudong’s harvest is twice as much as that in northwestern regions. Which region can drive real progress? He agreed but said it might cause political problems and more regional imbalances.
We had done a lot of thinking on how to introduce Pudong to the world. Instead of presenting it only as a new area in China, we emphasized its position in the world. We introduced it as part of the Asia-Pacific economic corridor, which starts from Tokyo and all the way to Seoul, Shanghai, Taipei, Hong Kong and Singapore. At that time, the total GDP of these cities and their neighboring areas accounted for 15% of the whole world. As Shanghai is in the middle of this economic corridor, investment in the city can help attend to businesses in northeast Asia and southeast Asia. It was quite persuasive. We also stressed that we were not only driving economic or project development but also social progress. Despite limited funding, we tried to spend more on building schools and hospitals. That is basically what we have planned in Pudong.
I don’t like to use figures to describe Pudong’s development, because that may get people confused and does not tell our characteristics. People may ask what does Pudong differentiate itself from Shenzhen and the Four Asian Tigers? They all have export processing zones, but Pudong has other unique features.
The most important thing for the development of Pudong is our basic idea. It’s not about GDP, highway, or power output, and it’s about how we conceive the idea of development. The first one is to think about the development of Pudong standing next to a world globe, that is, we must design Pudong against the background of economic globalization. The second idea is that the development of Pudong cannot be specified in a certain area, it must be all-embracing and cover the whole sphere of our society. And the third, we didn’t have much money then, so we have to attract foreign investment and seek external financing. And because we didn’t have money, we have to sort out a priority for development and also a priority for land supply. So, that’s why we choose to develop infrastructure first – cities cannot live without water, electricity, gas and transportation. And then finance. We tried to attract big international banks by leasing them land with good locations. Of course, we needed to develop high technology.
While Mr. Trump keeps complaining about forced technology transfer, based on my own experience, I don’t think we “forced” anything during my stint in Pudong. For starters, the automobile industry was very poor in China back then. In more than 20 years, the Shanghai Auto Works only produced 100,000 cars. So we went to Toyota and asked for technological cooperation, but they told us that we were not ready to make cars, and buying would totally suffice. They told us that based on Japan’s experience, it would take a few more years before we could actually produce cars. We went to Toyota for a couple of times before they got restive, so we took another shot with Volkswagen. The Germans were quite explicit that we could build our own cars as long as we met two requirements. First, we bought their intellectual property rights, and second, we utilized home-made parts after they were tested & qualified in accordance with German standards, simple math! When we were almost successful in manufacturing the first Volkswagen Santana, we went to Toyota again and were refused again. Probably they felt we still couldn’t work things out even the Germans had come to help. At that time, Ford and GM showed up, both boasting they had the best technology to offer, and both promising to give us their newest models. Why? Because they knew we were already working with Volkswagen, meaning that if they didn’t give good technologies, they probably would lose out to the German carmaker. Of course we did have one requirement — joint venture. And yes, those companies did share with us their technology, but we didn’t force anything. They were both competing for the opportunity to seal a deal with us.
In terms of land use, we also had our own ideas. When Pudong New Area was established, it only covered 6 million square meters, now it has more than 20 million after several expansions. It is pretty large now, but still not enough. But back then, leasing land, particularly to foreigners, was forbidden, it was even against the Constitution. Having no way to go, we came up with the idea of “land-use rights,” so we were just leasing the right to use the land, instead of the land itself. It was not easy to get things done, but we made it. By now, the Constitution has long been amended regarding land-use rights.
We also proposed the idea of “cherishing the land as gold.” In Pudong, the land lease is not measured by mu (one mu is equivalent to 0.0667 hectares), but by square meters, and each building is leased according to its floor area. Shanghai is the earliest and probably the only one in China to raise this idea and we even asked calligraphers to write this slogan and had it pasted on the wall to remind ourselves. When some high-ranking officials from Beijing came and saw the slogan, they asked, “What do you mean by this? The land is very expensive?” Our answer is always yes. Not only is the land very expensive, we would also evaluate how land lessees utilize the land, as well as their investment density.
Back then there was a saying in China, “you build up a stage with culture and arts, and then on the stage you can develop economy.” It basically conveyed the idea that in order to attract foreigners, you should develop literature and arts first, through holding art shows, film exhibitions, kite festivals, etc. In Pudong, we didn’t do any of that, because we knew that meant two types of people. You want intellectuals and artists, fine, but they don’t do investments. And for entrepreneurs or economists, theatres are not the reason that they would come to your place. In all, we do not agree with the saying.
We also had different views on the once prevailing practices of “building nests to attract the phoenix.” In some places, development zones had been established, but no one came. Then what? They built houses, believing that as long as the houses were ready there would be investment. I talked many times with my Japanese friends about this, and they had assured me that the hypothesis was wrong. Their belief was, if you want to build a hotel, you have to consult the future hotel operator at the beginning stage, and that was how MORI Building and other famous Japanese companies did. I agreed with them, so I did not “build nests to attract the phoenix.” Wait until the phoenix comes, then you build nests.
In the 1990s, many pop stars were invited from Hong Kong and Macao to perform in inland counties. After their performance, local officials would literally give them some land as a reward or a gift. That was hilarious and wrong, in Pudong we never did things like that.
I was in charge of the land lease. Land prices varied, mostly based on locations. One square meter could cost up to $300 for a good location, while for a bad one it may only need $20 to $50. We wrote down rental prices on the map and examined closely to make sure that prices were reasonable. If we noticed a $100 among many $300s, there must be a problem. We needed to avoid cheap leasing. You see, it was not easy to “cherish the soil as gold.”
Today we always talk about “don’t forget the original aspirations.” For Pudong, our original aspiration was to build a prosperous new urban area and a central city in the Asia-Pacific region. And most importantly, we must have integrity and work in the interest of the public. To achieve that target, we laid down several stipulations. The first one is to use first-class Party building to promote first-class development; the second is to develop good habits of diligence and honesty; and the third, we forbid major leaders of Pudong, including myself, from attending any land leasing meetings or auctions, and we were not allowed to take special care of our former subordinates or friends when it came to house relocation.
The ideas for the development of Pudong mentioned above have proved successful. Today, Pudong has encountered new challenges, such as lack of land, and high wages. It’s a pity that I did not read the research reports of Cloud River Urban Research Institute until recently. It could have been of great use back then. We can never change the past, but we can summarize experience whether in success or failures in the past. That’s how we create our times. I hope today, those research reports can avail today’s mayors and play an important role in urban construction.