Don’t Believe the Shanghype

With Shanghai the focus of worldwide attention as the World Expo opens, Foreign Policy says the city is not all it’s hyped up to be:

Let’s wish the Shanghainese all the best as they gear up for their party. The Expo looks like it will be a lot of fun, and we certainly hope that’s the case. But beware. Tradition teaches us that fairs also make great occasions for hucksters and con artists. So a word of friendly advice: Should you happen to hear people assuring you how Shanghai ought to serve as a “model” for China, or even the rest of the world — put a hand on your wallet. Somebody might be trying to pull a fast one.

Foreign business people, in particular, love to gush about Shanghai. Look at Pudong, the city’s financial district, where a forest of skyscrapers has sprouted in the course of a few years. Look at the state-of-the-art hotels, the fizzy night life. Look at the awe-inspiring infrastructure, from the city’s immense container port to the maglev train that whips visitors into town from the airport at 268 miles (431 kilometers) per hour. So it’s easy to understand why in 2004 the World Bank, which often praises Shanghai for its strong business spirit, chose the city for a conference designed to celebrate China’s success at combating poverty. Earlier this year, the New York Times’ Thomas Friedman invoked Shanghai, along with Hong Kong, as the embodiment of China’s vibrant new business culture, “a highly entrepreneurial sector that has developed sophisticated techniques to generate and participate in diverse, high-value flows of business knowledge.”

But what if Friedman and the World Bank are wrong? That’s one of the conclusions that emerges from Capitalism with Chinese Characteristics, a new book by Yasheng Huang, a China-born economist at the Massachusetts Institute of Technology. “I never bought into the idea that Shanghai was a laissez-faire capitalist city, like Hong Kong,” said Huang in an interview. “That simply wasn’t true. And a lot of Shanghainese know that. They know that it’s not a free market environment.”

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