Shanghai And Hong Kongs Contributions To Chinas Economic Modernization

Shanghai And Hong Kong's Contributions To China's Economic Modernization Timothy Scott ECON. 400 Professor Roberts Midterm Essay Shanghai and Hong Kong's Contributions to China's Economic Modernization Some people predict Shanghai will replace Hong Kong in the future. Others argue that Hong Kong will remain as China's gateway to the rest of the world. For the past few months, I studied intensively about China and Hong Kong's history, culture, economy and politics. Hong Kong and Shanghai have made immense contributions to China's economy and modernization. However, I believe that Shanghai is still lacking the proper and sophiscated infrastructure such as the legal system and freedom of the press. In the years to come, Hong Kong will remain the financial and economic center of Asia due to its vast resources, legal infrastructure, history, and culture. In the past two decades, Shanghai has made great contributions to China's economic modernization. According to Cheng Li, in the article, The Color of Money, Shanghai had one-eighth of the total industrial output of the nation in 1980. In the early 1990's, Deng Xiaoping realized the potential of Shanghai, and urged the municipal government to develop the local economy and attract foreign investment. The entire city went under a reconstruction era, also known as the construction fever period. Hundreds of skyscrapers were built, and vast rural areas were transformed into new modern towns. Today, department stores and high rise buildings are not uncommon in Shanghai. The newly built Oriental Pearl TV Tower in Shanghai is now Asia's highest television tower. Shanghai not only underwent a physical change, but its economy boomed as well since 1993. The city has attracted more foreign investment than ever before. Currently, 121 largest transnational corporations operate in Shanghai. Investments include subway lines, highways, bridges and tunnels linking the Huangpu River and Pudong. It is estimated that $2.35 billion has been invested in Shanghai by foreign investment. In addition, the development of Pudong made it China's largest economic zone. Shanghai, without a doubt, is the engine that drives China's economic modernization. At the same time, Shanghai does not have the proper legal infrastructure, and freedom of the press to be the financial center of Asia. During my China traveling seminar in Shanghai, a Shanghaiese lawyer emphasized in order to be successful in China, all you need is a network of connection. This is also known as guanxi and it plays a crucial role in China. The fact is, China is under a system of rule by law and not rule of law. The legal infrastructure does not give you the protection you need from corruption and white-collar crimes let alone ensure an environment of free competition and productive workforce. Shanghai not only lacks legal protection, but it also lacks freedom of the press. The CCP has been and will always be a dictatorship over the media. One of the reasons is because China has always been very protective of its image. Any dishonorable and offensive news to the government, regardless of its importance, would not be allowed to publish. The central government also feels the necessity to control the media in order to prevent rebellions. Therefore, the people of Shanghai and China rarely know the truth behind current news. The importance of proper legal systems and freedom of the press are crucial to China's economic development. If the central government continues to neglect these factors, it will be detrimental to the future development of China. From the period 1949 to 1976, Hong Kong was China's gateway to the capitalist world. Today, Hong Kong has become even more important to Chinese economy and the international world. First of all, Hong Kong has vast resources such as managerial know-how, technology, financial and marketing skills. These important resources has been transferred to China as Hong Kong manufacturers move across the border to take advantage of cheap land and labor force in the 1980's. (Yahuda, p.24) While Shanghai has attracted foreign investments into China, Hong Kong has accounted for between 60 and 80 percent of the total foreign direct investment in China. In 1993, there were 50,868 investment projects of Hong Kong and Macao businesses in China with a value of $76.756 billion. The majority of investments are concentrated in the Guandong province. Through these direct investments, came