Shanghai 2035 making a great city even better

By Benjamin Cavender

2017 was a year of massive technological changes globally and was the year where AI, blockchain, and other technologies began to take over the world’s collective imagination.  As we head into 2018 we are likely to see further disruption due to technology and as well a further funneling of economic resources and talent to a few key centers of excellence around the world.  In the US, Silicon Valley, New York, and Los Angeles will continue to attract bright young people seeking to make their fortunes, and in Europe the same is true of London.  But overall 2018 and the decades ahead belong to Asia and to cities like Shanghai.

Photo taken from Shanghai Tower on April 27, 2015 shows a view of downtown Shanghai, east China. [Photo: Xinhua]

In December, Shanghai received approval for its 2017-2035 development blueprint aimed at making Shanghai an ‘excellent global city’ by 2035.  Having lived in New York, London, and now Shanghai for the past 12 years I can say that Shanghai already is a leading global city.  In KPMG’s 2017 report on world innovation centers Shanghai was rated as the global city most likely to surpass Silicon Valley as an innovation hub, ahead of New York.  This is due to the strength of the ecosystem that Shanghai has built for innovation and because major companies based in Shanghai have been willing to take risks to implement technology breakthroughs being pioneered in China.

While Shanghai’s economic rise has been impressive the city faces many of the same challenges that both New York and London face, but on a larger scale.  All three cities are incredibly important economic hubs and all three now attract the best and brightest from at home and abroad.  As a result, they are dealing with problems of overcrowding, congestion, air pollution, and issues related to wealth inequality.  The difference is the scale of the problem to be overcome.  London’s population is less than half that of Shanghai, and New York has been dealing with issues of housing inequality for several decades and has had longer to work on solutions to the problem.  The speed with which Shanghai is changing makes the city more dynamic but also means that the scale of the problems that Shanghai needs to overcome is larger.

The city has grown too quickly and much of its infrastructure is stretched.  Shanghai’s metro system is already the largest in the world, but key lines are crowded to the point of being unusable during peak hours.  Automobile traffic is also incredibly congested and to combat crowded roads Shanghai has implemented a lottery system for license plates. The average apartment in Shanghai now costs the equivalent of 60 times someone’s average salary.  The 2017-2035 plan seeks to address these issues and focuses on a few key themes: how to make Shanghai more innovative, humanistic, eco-friendly, and how to extend Shanghai's global influence.

To reach these goals Shanghai is expected to focus on several metrics for improving livability including slowing population growth so that Shanghai's population only rises from 24 million permanent residents today to 25 million in 2035.  Additionally, there will be emphasis on tackling pollution problems with a goal of reducing pm2.5 pollution from 45pm per square meter to 25pm per square meter, increasing green space per capita from 7.8 square meters to 13 square meters, increasing forest coverage from 16% to 23%.  These efforts will go a long way towards making Shanghai feel like a more comfortable city.  

Planners are also looking to increase Shanghai’s lead as an innovation hub and are looking to increase R&D investment as a share of GDP from 3.8% to 5.5%.  While this represents big numbers in terms of investment this plan will only work if rules for startups make it easier for small companies to find funding and cut through bureaucracy.  Shanghai’s economic gains have been impressive, but the city still has a long way to go in terms of improving ease of doing business.  The ecosystem for success exists, but small businesses still struggle.

One of the areas where Shanghai has not yet reached world class status is as a cultural hub and the development seeks to address this as well with a goal of growing the number of museums in the city from 124 to 375.  This is an admirable goal, but by itself will not be enough and the government needs a plan in place to foster art, music, and other cultural performances featuring both Chinese and international artists.  

To solve Shanghai’s housing crisis there is also an emerging plan in place to increase the stock of residential property that is targeted at the rental market and reducing the overall amount of land available for commercial development.  This is an area where the municipal government will have to work hard over the next few years to build housing stock as the current plans will probably not be enough to offset high prices, and because the majority of consumer wealth is tied up in real estate using policy to drive down housing prices is not a realistic policy objective.

Finally, Shanghai is also expected to emphasize key improvements to infrastructure including increasing the length of track on the world's most extensive metro by 50% and adding nearly 1000km of rail to smaller cities positioning Shanghai as an accessible hub for business and culture.

In many ways Shanghai already eclipses other great world cities and the next decade looks promising for the city.  Air pollution has improved over the last 5 years and the city is continuing to invest heavily in transportation infrastructure and green spaces need to make Shanghai feel like a livable city despite its size.  If the government continues to foster innovation and invest in technology and entrepreneurship the way it has Shanghai’s future will remain bright.

(Benjamin Cavender is director of China Market Research Group)