24 January 2005

SHANGHAI – Back in the 1930’s, Shanghai was the wickedest city on earth. Just beyond the stately buildings of the Bund, Nanjing Road, and the European Concessions lay squalid slums, armies of leprous beggars, thousands of child prostitutes, and opium dens.

Shanghai teemed with gun runners, con men, spies, mysterious White Russians and German Jewish refugees, all looked down upon with scorn by the elegant British merchant class, whose wealth had been built on the forcible addiction of Chinese to opium.

This was the fabled seaport of Marlene Dietrich and Humphrey Bogart, of Generalissimo Chiang Kai-shek and his Dragon-lady wife, Madame Chiang, who reportedly proposed to US Republican front-runner Wendal Wilkie they ditch their spouses, marry, and rule the world together. Proving that only the good die young, Madame Chiang died on a few years ago in her New York City exile.

And the evil-reputed port that gave us the term `Shanghied,’ — being drugged, knocked out, pressganged aboard a freighter or otherwise robbed, an experience this writer barely escaped one night up a dark Shanghai alley.

This was the revolutionary city of the young communist movement led by Mao and Chou En Lai, where French author Andre Malreaux watched Marxists being thrown live into locomotive furnaces. The fief of Shanghai’s Godfather, Big Eared Du, boss of the notorious Green Gang and Chiang’s ally.
Asia’s capital of cocaine, heroine and white slaves that was fought over by China’s 1930’s warlords, with names like `The Dogmeat General,’ `The Perfect Governor,’ and the `Muslim General.’

Shanghai still retains a sinister flavor. But today, it has become China’s economic powerhouse. It has just surpassed Rotterdam in tonnage to become the world’s second busiest port, exporting US $74 billion annually. With 13 million registered residents, and 7-10 million itinerant laborers, Shanghai is now more populous than Australia.

Last night, being driven around a military limousine, I saw 22 huge trucks cued up to deliver cement to one of the city’s scores of 24/7 skyscraper projects. In spite of a forest of new office buildings and condominiums – average price $350,000-400,000 – demand continues to exceed supply by 50%. Three quarters of all the world’s heavy construction cranes are said to now be in China, with a good part of them in Shanghai.

Shanghai’s natives have their own impenetrable dialect outsiders cannot understand. They are brash, pushy, commercially gifted, and always in a rush. A native New Yorker like me feels right at home here in China’s Big Wonton.

Shanghai has also resumed its role as China’s hippiest, most avant garde, cosmopolitan city, filled with cultural events, galleries, spectacular restaurants and dazzling architecture that makes the downtown look like a cross between Manhattan and a futuristic capital in a in a science fiction film. Shanghai is now one of the world’s hottest destinations.

When the communists took over Shanghai in 1949, its business elite fled to British Hong Kong, quickly turning that port into an economic giant. Today, Shanghai is beginning to eclipse snooty Hong Kong, which is looking rather old and tired compared to Shanghai’s pulsating economic power. Over dinner at Hong Kong’s exclusive Bank of China Club, filled with retro Maoist chic, a business leader confessed to me his city was becoming a backwater compared to brash Shanghai..

New factories are sprouting everywhere up the Yangtze River west of Shanghai, China’s most dynamic industrial corridor, bringing the benefits of the coastal boom to the long-neglected, impoverished interior. Shanghai’s hinterland has become the world’s factory, producing everything from black socks to the most advanced technology. Growth is held back only by shortages of power and steel. Chinese entrepreneurs are even building new plants as far west as Inner Mongolia and up the higher reaches of the Yangtze River – all in pursuit of ever cheaper labor.

Unrestrained credit, a torrent of foreign investment, and China’s get-rich-quick policies are producing a dangerous credit bubble and runaway 11-15% annual growth. The communist party clearly has a tiger by the tail. A recent 1% increase in interest rates by the central bank is not expected to have much braking effect on China’s runaway growth. A recent count showed some 236,000 Chinese US dollar millionaires, not to mention a handful of billionaire moguls in Hong Kong, Beijing and Shanghai.

I lunched with a general who had been secretary to China’s late leader, Deng Xiaoping. In 1992, Deng went to southern bChina and famously proclaimed economic liberalization and free markets. Deng’s reforms set the stage for China’s massive boom, unleashing the long pent up economic power and natural talents of China’s 1.2 billion people. A cynic might well add that the fevered patriotism and altruism of the Maoist era has totally vanished, replaced by the crassest commercialism and overwhelming greed. Those seeking the spiritual side of China will be sorely disappointed.

Deng’s successor-in-waiting, reformist prime minister Zhao Ziyang, who died this week while under house arrest, deserves credit for many of Deng’s economic reforms. However, the communist party squelched news of his death and kept Zhao a non-person for having dared challenge party hardliners.

Deng had the wisdom to decree that China had first to become a modern economic power before it could develop offensive military forces. Today, China is nearing the point where its surging economy, the world’s seventh largest, will make it formidable geopolitical rival challenging US power in north and south Asia.

The likely sale of advanced European arms to China will modernize its armed forces, allowing them to project military power beyond littoral regions. China’s voracious industrial appetite is making it America’s major rival for Mideast, African and Asian oil and for other strategic materials.

So Big Apple and Hong Kong, watch out! The Big Wonton is on a roll.

Copyright Eric S. Margolis 2005


*Thai Airways is a pretty good airline, provided you get one of their modern aircraft, such as A320’s and late-model Boeing 747-400 models. Beware earlier 747-200 and 300 models: they are old, tired, and have horrid seating. I had a genuine flat bed on a Thai 747-400 flight from London Heathrow to Bangkok – a good flight with good service and no delays.

*My travel agent used to call China’s airlines `the national form of population control.’ But in recent years, they have much improved, thanks to new western aircraft, better training and maintenance, and enhanced air traffic control. China Eastern still flies decrepit A300’s, which should be avoided. Its modern A320’s are good. I prefer China Southern, which also flied Airbus equipment and has the best safety record. Just remember, flying anything in China, even Air Inner Mongolia, is always safer than driving on China’s kamikaze roads. While China’s airlines steadily improve, America’s and Canada’s grow worse.

*Flew around Burma, and lived to tell the tale, but likely used up a few more of my nine lives (actually, I’ve already gone through twelve). More on this magical country in an upcoming column.

*Bangkok’s Oriental Hotel, my favorite hotel in the entire universe, remains far ahead of any other hotels, anywhere. The hotel may be getting old, but no other hostelry comes close to offering such splendid service, comfort, attention to detail and excellent food. This is the 30th year at the Oriental and I hope to spend my afterlife there, in suite 711, overlooking the Chao Praya River. While good, none of the other Mandarin Oriental Hotels that I have stayed in around the globe are the equal of the Bangkok flagship.

Copyright Eric S. Margolis 2005

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