SUNDAY, SEPTEMBER 26, 2010
KLMNO THE WORLD Ascendant Shanghai’s sibling rivalry with Hong Kong China’s drive to establish mainland city as another New York or London seems to challenge former British colony down south
BY KEITH B. RICHBURG IN SHANGHAI
C
hinese leaders have an- nounced an ambitious new plan to turn this sprawling city on the YangtzeRiver intoanin-
ternational finance and business center,onaparwithNewYorkand London, by the year 2020. The move raises intriguing
questions about Hong Kong, which already plays a similar role. Is there roomfor both? CanHong Kong keep its edge? Or does Shanghai’s outsize ambition threaten to supplant the former British colony down south? The questions extend beyond
the financial sphere,asShanghai’s rise seems to challenge Hong Kong’s long standing as China’s most cosmopolitan, diverse, worldly and exciting place to live, work and do business. In every- thing fromresearch and develop- ment to Disney theme parks, Shanghai and Hong Kong often seem locked in a game of urban one-upmanship, a rivalry worthy of New York vs. Washington, or London vs. Paris. There’s a fair amount of home-
town chauvinism — and look- down-your-nose snobbery — on each side. Shanghainese are par- ticularly proud of their city, and see it returning to its past glory as Asia’s most international center. But many Hong Kongers see Shanghai as part of the still-wild, disorderlyanduncouthmainland. “The problemwith Hong Kong
is they need to change their infra- structure, especially their soft in- frastructure,” said economist Xu Mingqi,with the ShanghaiAcade- my of Social Sciences. “They need to attract talent, to develop sci- ence and technology.” But aHong Kong Chinese busi-
nessman who travels regularly to Shanghai said the difference is cultural. “Shanghai seems quite ‘mainland,’ and that’s code-speak for not quite civilized,” he said. Likeothers, thebusinessman—
who asked not to be quoted by name criticizingChinabecausehe does business there — voiced the suspicion that as Hong Kong’s people clamor formore democra- cy,Beijingmaybehedgingitsbets. “If Beijing trustedHongKong 100 percent, they wouldn’t need Shanghai,” he said. At first glance, Hong Kong ap-
pears to have a lopsided edge in the competition. It had about a 30-year head start, since China— and Shanghai — were largely iso- latedfromthetimeof theCommu- nist takeover until the launch of Deng Xiaoping’s economic re- forms and opening in 1979. Dur- ing that time, Hong Kong estab- lished itself as the main entrepot to the closed-off Chinese main- land. English-speaking Hong Kong
routinely ranks in surveys as one of the best places in the world to do business. Its thriving stock market has 1,273 listed compa- nies. Its civil service is interna- tionally recognized. Its flat-tax rate is a low 15 percent,making it an attractive place for expats and their families. And, perhapsmost important, itsBritish-inheritedle- gal systemis consideredoneof the fairest in theworld. “People are confident in Hong
Kongcourts,” saidPatrickChovan- ec, who lived in Hong Kong and nowteachesatTsinghuaUniversi-
KIN CHEUNG/ASSOCIATED PRESS Displays inHongKong’s Victoria Park marked theMid-Autumn Festival during last week’s full moon. DIGEST EASTASIA
Japan rejects demand by China for apology Japan strongly rejected a Chi-
nese demand Saturday that it apologize for detaining a Chinese fishing boat captain whose arrest after a collision near disputed islands plunged relations be- tween the two Asian powers to their lowest level in years. Japanese authorities released
the captain early Saturday,andhe was flown home by chartered plane. However, hopes that his release would defuse tensions were quickly dashed. “It is unlawful and invalid for
Japan to detain, investigate or take any form of judicial mea- sures against the Chinese fisher- menand trawler,”China’sForeign Ministry said in a statement. “The Japanese sidemustmake an apology and compensation for this incident.” Japan’s Foreign Ministry said
the demands were groundless and “absolutely cannot be accept- ed.”
—Associated Press KASHMIR
India takes steps to address grievances
India ordered the release of Kashmiri protesters jailed during violence that has killed more than 100 people, and will appoint mediators to defuse one of the most serious challenges to Indian rule in two decades. The federal government said in
a statement that it has also asked authorities in the state of Jammu and Kashmir to immediately re- open all schools and colleges and review steps to scale back securi- ty forces in the summer capital, Srinagar, and other towns. The freeing of those detained
while protesting against contin- ued rule from New Delhi meets a key separatist demand. —Bloomberg News
MIDDLEEAST
Clinton seeks way to save peace talks Israeli settlers have hauled
construction equipment into a
Jewish settlement deep inside the West Bank, Israeli and Palestin- ian officials said Saturday, a day before the end of a government- mandated halt to settlement building. Israeli Prime Minister Bin-
yamin Netanyahu, who imposed the slowdown 10 months ago as a peace gesture, says he will not extend the restrictions. But the Palestinians say they will not continue negotiations if building resumes. With the clock ticking, Secre-
tary of State Hillary Rodham Clinton was racing to broker a compromise before the midnight Sunday deadline in hopes of averting a breakdown in newly launched peace talks. —Associated Press
Nobel laureate founds party in Nigeria: Nobel prize-winning writer Wole Soyinka launched a new Nigerian political party, challenging voters in the oil-rich nation to oust a government he called cynical and brutal. Mem- bers of the Democratic Front for a People’s Federation elected Soyinka leader during the party’s
inaugural meeting. The essayist, who is 76, said later he would not run in a presidential election next year.
Embassy bombing suspects ac- quitted in Pakistan: A Pakistani court acquitted three men ac- cused of involvement in a 2008 suicide car-bomb attack on the Danish Embassy in Islamabad, a public prosecutor said, saying that there was “insufficient” evi- dence against them.
Bombings kill 3 NATO troops in Afghanistan:ThreeNATOservice members were killed in two bomb blasts and more than 30 insurgents died in a clash with coalition troops in eastern Af- ghanistan, the military alliance said.
U.S. drones kill 4 in Pakistan: SuspectedU.S. missiles targeted a vehicle in northwestern Pakistan, killing four alleged militants, in- telligence officials said. It was the 17th such attack thismonth—the most intense barrage since the airstrikes began in 2004. —From news services
VENEZUELA QILAI SHEN/BLOOMBERG
Aman exercises on the Bund, Shanghai’s colonial-era banking center, across the river from the Lujiazui financial district, key to China’s effort to make the city an international center of finance and business.
ty’sSchoolofEconomicsandMan- agement in Beijing. In Shanghai, bycontrast,hesaid, “theideaofan independent judiciary doesn’t ex- ist.” But Shanghai is racing to catch
up. A far larger city — 19 million
people toHongKong’s 7million— its stockmarket,now20years old, is growing quickly; it lists 870 companies with amarket capital- ization of $2.6 billion, and thou- sands more mainland firms are
waiting to be listed. Shanghai is building infra-
structure at breakneck speed, in- cluding a new financial center in Pudong, and using tax breaks and other incentives to try to attract foreign firms. It is outspending
Te boss
Maximum tax rates (income / corporate)
Foreign direct Investment in 2009
$48.4 billion
Multinational companies with regional headquarters in 2009
Subway systems 9 lines 106 miles total Tallest building SOURCE: Staff reports
HongKongonresearchanddevel- opment, $5 billion to about $1.5billion,byreliableofficialesti- mates. Perhaps Shanghai’s biggest
edge is that it is part of the vast market known as the Chinese mainland. “It doesn’t have a bor- der,” saidMurray King,managing director for greater China for APCOWorldwide, a business and communications consulting firm based in Shanghai. “It is the head of the dragon.As long as the drag- onishealthy, theheadwillbe very, very healthy.” Already, Shanghainese have
somebraggingrights.TheirWorld Financial Center is taller than Hong Kong’s International Com- merce Center by 26 feet. And Shanghai hasmore Starbucks cof- fee shops than Hong Kong, 122 to 106—and Starbucks is only likely to expand in Shanghai. Of course officials onbothsides
adamantly deny there is any rival- ryatall,andstress that thetwoare more like loving, if competitive, siblings,with a single, benevolent parent—in this case, the Chinese capital,Beijing. “We’re both intelligent, capable
kids,” said Patrick Chan Chi-king, director of the Hong Kong eco- nomics and trade office in Shang- hai. “I think they favor both of us,” he said of the central government inBeijing. TheBeijinggovernmenthasan-
nounced its intention tomake the Chinese currency, the renminbi, or yuan, an international curren- cy, andHong Kong nowenvisions for itself a new role as China’s offshore renminbi center. “Hong Kong and Shanghai can
play complementary roles, each performing its unique role and contributing to the nation’s eco- nomic development,” Chan said. Somehave comparedthe relation-
International Commerce Center
118 floors 1,588 feet
11 lines 261 miles total
Shanghai World Financial Center
101 floors 1,614 feet
THE WASHINGTON POST
ship to New York and Chicago, withNew York havingWall Street and Chicago being the center for commodities trading. Shanghai officials, too, insist
that talk of a rivalry is overblown. “Shanghai and Hong Kong
should learn together,” said Liu Bo, curator of Shanghai’s Urban Planning Museum, which show- cases this city’s world-class ambi- tions. “It’s like we are holding hands, to develop together.” Nonetheless, Shanghai is push-
ing forward onmany fronts. “Shanghai is trying to be the
HongKong ofChina,” saidKing of APCO. “It’s also trying to be the Detroit of China froman automo- tive perspective. It’s trying to be the Seattle of China froman aero- space perspective. And it’s trying to be Silicon Valley from an IT perspective.” By contrast, there is a wide-
spread feeling, both on the Yang- tze River and at Hong Kong har- bor, that Hong Kongers paid too much attention to thewealth gen- erated from the city’s booming real estate, at the expense of al- most everything else. “HongKong is focusedonmon-
ey—it’s just a real estatemarket,” said Luo Ying, who moved to Shanghai in 2001 to set up a bio- tech laboratory after a decade in SiliconValley. But that single-minded focus
may beHongKong’s saving. “Hong Kong’s industries are
hollowing out,” said Xu Mingqi, the economist. “Hong Kong’s sci- ence and technology base is not that strong.” Then he added: “But Hong
Kong companies know how to makemoney.”
richburgk@washpost.com
Staff researcherWang Juan in Shanghai contributed to this report.
1,298 $13.3 billion 260
Donald Tsang Chief executive Appointed 2005
15% / 16.5%
Yu Zhengsheng Party chief Appointed 2007
firms in suburban areas 45% / 25%*
*With discounts to
Two cities on the world stage Shanghai hopes to become a major hub for international business and culture in China — a mantle long held by Hong Kong alone. How the two cities compare:
Population
HONG KONG 7 million
SHANGHAI 19.2 million
EZ RE
A17
MIGUEL GUTIERREZ/AGENCE FRANCE-PRESSE VIA GETTY IMAGES
Although downgraded to a tropical depression Saturday, the storm calledMatthewis still being felt in Caracas,Venezuela, where it caused a landslide last week and left at least seven people dead.
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