SHANGHAI, China -- This giant of a city believes its time has come again.
Once called the "Paris of the Orient" -- and several scatological epithets -- Shanghai was shackled under the first four decades of Chinese communism, its prowess drained to support the rest of China.
But over the last two years, Shanghai has been unleashed, sparking a crescendo of change and an upbeat rush to the future.
Huge chunks of the city are under reconstruction, redressing years of neglect, with expressways, bridges, a subway, river tunnels, a new port, a second airport and dozens of high-rises. The work may push a million of 14 million residents out of its jam-packed core.
Pudong -- a high-stakes development zone between Shanghai and the East China Sea that initially provoked skepticism -- now is luring investment from some of the world's biggest companies. The multinational firms aim at the Yangtze River valley's largely untapped market of 300 million consumers.
Shanghai even seeks to reclaim its past glory as Asia's top financial center, ambitiously boasting that it could surpass Hong Kong in a generation if China's financial reforms continue, the city's 3-year-old stock market expands at its current rate, and foreign bankers and brokers remain hungry to get in on the action.
In the meantime, much the same boom that transformed and enriched Southern China and, before that, the rapid-growth Asian "tigers" -- Hong Kong, Taiwan, Singapore and Korea -- has now enveloped Shanghai. And a mad race is on to take maximum advantage of the extraordinarily good times.
"Everyone's coming from all over the world to Shanghai now like it's just full of money," says Chen Xingfu, a local financial consultant. Business is so bountiful that he's considering joining a new yacht club that's opened on a suburban lake. Initial fees run $10,000.
"It's like 1888 in San Francisco, the Gold Rush days: The rules are wide open, and no one's enforcing them," says Diane Long, president of Shanghai's American Chamber of Commerce. The chamber has ballooned from 280 to 543 companies in two years. Some wait a year for limited Western offices and apartments at rental rates that top Manhattan's.
"Every day brings change," says Zhang Qing, 23, prowling a flashy disco atop a Shanghai hotel owned by the Chinese army. By day, she says, she earns $57 a month as a nurse. By night, she and a seemingly endless squad of like-minded young women begin at $23 for a bit of small talk with Hong Kong and Taiwanese businessmen.
"Things are happening so fast that if you don't go down a street for three weeks, you find another building has been torn down and the whole configuration has been changed," says Mark Hu of Shanghai Johnson Ltd., which is sinking $30 million into a Pudong factory to make Pledge furniture polish and Raid bug killer for China. Foreign investment here in just the last two years more than tripled the total for the entire 1980s.
"This is the last opportunity for Shanghai to change its face and become an international city," says Xu Kuangdi, a vice mayor. Mr. Xu is pressed for time this day; another foreign investment house is paying its respects, joining the many money men eager for a renewed perch here as an antidote to the developed world's slow growth.
Shanghai's "last opportunity" was set in motion by senior Chinese leader Deng Xiaoping. The patriarch didn't risk allowing the city to participate in his economic reforms in the free-wheeling manner of Southern China in the 1980s; Shanghai was too critical to China's economy.
But even Mr. Deng now has expressed regret about that caution. His famed trip to Southern China in early 1992 -- in which he endorsed creating a "socialist market economy" -- provided Shanghai's go-ahead. "In Deng's reforms, Shanghai was his trump card," says a local journalist.
Long renowned for its savvy and lively step, Shanghai took off. Its annual growth rate the last two years has approached 15 percent, even outstripping China's yearly rate of 13 percent for the same period.
As in the rest of China under Mr. Deng's market reforms, political control remains tight here. Two of Shanghai's leading dissidents, elderly writer Wang Ruowang and young journalist Zhang Weiquo, have left for the United States. Arrests and harassment of other activists continue.
But on the economic side, Mr. Deng, who winters at a state guest house on the city's west side, wants Shanghai to move even faster. And that is apt to remain a national priority since two of his possible successors, President Jiang Zemin and Vice-Premier Zhu Rongji, are former Shanghai mayors.
New prayer
Almost everything's for sale here. Shanghai's museum has been leased to a Hong Kong company for offices. Up for grabs, particularly by foreign banks, are City Hall (the pre-1949 quarters of the Hongkong & Shanghai Bank) and dozens of other stately European structures lining the Bund, Shanghai's historic riverfront esplanade.
Its Russian Orthodox Church, down to a few aged believers, now houses a stock brokerage. Under its heavenly blue domes, investors cram into pews before an electronic tote board. Shanghai's market has had its first investor suicide and takeover battle. A karaoke bar, the "Shanghai St. Peter's Club," opened next door with a sign heralding a new prayer: "Open a Remy Martin, good things certainly come."
With the $150-a-bottle cognac, there's Mississippi blues and old Broadway show tunes, all on Orient Radio, Shanghai's new commercial broadcaster. Meanwhile, China's largest cable TV station outdraws other government channels with a steady diet of foreign flicks. One recent, interesting airing: Steven Spielberg's "Empire of the Sun," set amid the Japanese occupation of the city in World War II.
Compared to then, Nanjing Road, China's premier shopping street, glows like Las Vegas -- with at least twice the crowds. Two-story electric billboards tout Western name brands. No one pays any mind to a young woman cloaked in a full-length mink coat as she stands on a street corner chatting on her cellular phone.
But along the tree-shaded streets of the former French Concession, it's really getting elegant. A new store, opened with Singapore money on the first floors of an otherwise proletarian apartment house, displays Italian suits for $1,100. "Some of this stuff isn't such good quality," sniffs shopper Yu Yangang, 27, who made $23,000 last year by contracting to run part of a state electronics factory.
Outside, by the entrance to the still dreary apartments above, newspaper vendor Bei Fuhai, 40, struts the new Shanghai attitude as well: "We can't afford to go in there. But it's good, because maybe tomorrow we'll buy there. After all, we're rising and you're not."
Gold for some
Rising? "Like a helicopter," beams Simon Huang, a Taiwanese entrepreneur who just opened a glistening five-story emporium of 30 restaurants offering fare ranging from fast food to gourmet. To publicize its opening, he rented a stadium to stage a rock concert. Across the street, a competitor counters with a "catwalk" review of Russian women modeling lingerie for diners.
Gold draws a big crowd tonight to the nearby International Jewelry Full Corp. The store's class on investing in jewelry just broke up, and a bunch of Shanghai's nouveaux riches balance tea cups and investment tips with loud rock 'n' roll. Rings go for $1,000 or more; few are blinking.
But the really big party is at JJ's, the disco run by Taiwanese said to be partners with Chinese military interests. A wall of light and sound energizes probably the world's most frenzied dance floors. A mock spaceship glides above, dumping confetti on the young celebrants. The $5.50 cover charge is about a week's per capita income in China.
"Take me, take me," JJ's vocal track echoes seductively. "Take me higher."
Most don't get there. Millions of migrants are drawn from the hinterlands, impoverished drifters filtering down the city's bustling streets in their cheap blue work coats looking for something more than rural subsistence. Some beg with babies strapped to their backs. Knots of able young wait outside day-labor bureaus for work.
"There are too many people looking for jobs," says Yu Huawei, in TC his 20s, from a Henan Province village. He's been here already for two weeks with no luck. "My money's going to run out in a month."
They come while hundreds of thousands are being pushed against their will into Shanghai's suburbs by reconstruction that has pock-marked the city with countless cleared lots and cranes.
"Entire blocks are disappearing," Ms. Long says. "At night, you can feel the tremors from the dynamiting."
A million Shanghaiese will be uprooted by 2000, says Zhou Hanmin, a city legislator who admits: "This could be a big issue with the people."
In Beili, a neighborhood where residents already are steamed about 20-percent-plus annual inflation and growing layoffs at troubled state industries, they now face leaving nearby stores, hospitals and jobs to make way for an ultra-luxury hotel that is replacing their homes.
Quips a bitter woman in her 40s, surnamed Pan: "It's like being sent to the countryside in the Cultural Revolution."
Greed and promises
The last place most Shanghaiese want to go is Pudong, a vast tract across the foul Huangpu River from the city. In Beijing's plans, the area is to become the "dragon head" leading the development of the entire Yangtze River valley. Even Pudong officials still won't move there.
But with the central government investing several billion dollars in Pudong's basic infrastructure, the 3-year-old, 200-square-mile development zone now shows some life, from the functioning factories of a dozen transnational firms to the sprouting of Asia's tallest structure, a 1,522-foot TV tower.
Still, official greed threatens to stifle Pudong, where raw industrial land runs as much as commercial property in New York City.
"Shanghai has caught Hong Kong's infectious virus; it has gone crazy with the scent of money," says Norman Givant, a U.S. lawyer who has worked here nine years. "It's like a girl that's being courted too vigorously. Sometimes she begins to think it's her right."
While that has forced some foreign manufacturers to go elsewhere, the promise of Shanghai's burgeoning capital and commodity markets has foreign financial institutions hustling to entrench here, including such U.S. heavyweights as Merrill Lynch, Citibank, Morgan Stanley and Chase Manhattan.
In the last three years, the number of foreign banks operating here has zoomed from four to 26; that is likely to double within a year when some may be allowed to handle Chinese currency deals. Shanghai's new home for its stock market in Pudong envisions room for 6,000 trading seats for Chinese and foreign brokers -- up from just 480 today.
As with Pudong's promises, claims of the birth of a world financial center here are infused with some hot air. China's financial system is immature, its currency nonconvertible and its markets still subject to Beijing's overdirection and underregulation. World communication links remain below par.
But with China intending to funnel the bulk of its enormous needs for capital through Shanghai, most of the world's biggest financial players already have bet they can't afford to stay away.
"What's happening here is for real," says Fiepko Tammes Klug, head of France's Banque Indosuez here. "I not only see it here, I also can see it in Europe, Japan and America, which are waking up to the potential of this market. It's just a question of time. You can't expect Shanghai to run any faster. If it did, it would be a stampede."