Introducing Shanghai’s ‘New’ Party Leaders Go back »

2012-05-23 | All chapters

Introducing Shanghai's "new" party leaders
Wall Street Journal, May 22nd, 2012

It’s a year of political change for the Chinese Communist Party with a once-in-a-decade leadership transition planned this autumn. Leaders face political turmoil unseen in decades and an economy sending worrying signals. But that’s not exactly the way it looked Tuesday when the party’s Shanghai branch introduced its “new” lineup of cadres.

The Communist Party of China Shanghai Committee on Tuesday returned Yu Zhengsheng to its helm and reaffirmed Mayor Han Zheng as his deputy. In all, half the 12-person Shanghai standing committee representing 1.82 million local party members was unchanged, including its No. 3 cadre and the only woman in the party’s top rank, Yin Yicui.

In a mini-version of the ceremonial entrance expected in Beijing later this year, Mr. Yu led his deputies onto a stage in single file for a photo opportunity. After introducing them and making a few remarks, Mr. Yu led them back off the stage around eight minutes later.

At the national party conclave planned this autumn, Xi Jinping is expected to succeed Hu Jintao as the 70-million-strong party’s general secretary, and if tradition is honored the leadership will be announced in this same fashion. (Political analysts say the Politburo Standing Committee, the party’s highest decision-making body, may include Mr. Yu himself, setting the Shanghai leadership for a reshuffle later.)

Mr. Yu on Tuesday betrayed no hint of party disorder analysts say was unleashed by the recent ouster of Bo Xilai in Chongqing.

Another transition matters more to many in Shanghai than turns on the political stage.

The city, like China as a whole, finds itself at an economic crossroads after years of powerful growth. Government officials in Shanghai say they are trying to steer a crucial transformation, putting internationally focused services like finance on par with export manufacturing and investment.

“The central government demands Shanghai to become the vanguard of our country’s reform and opening up, and the pioneer of scientific development,” Mr. Yu said on Tuesday. The city, he said, should become a “socialist modern international metropolis.”

Investment, exports and housing have all sputtered in Shanghai. A rich-poor divide is evident, while rising elder-care needs reflect higher costs broadly for social programs.

Adjustment won’t come easily: Shanghai is a massive $304 billion economy with 23.47 million people, the biggest slice of a multicity Yangtze River Delta region that in recent years has represented about 1/6th of the Chinese total GDP.

“Shanghai can be seen as a bellwether of the greater Chinese economy,” says Andrew Polk, an economist at the business group Conference Board in Beijing.

The city doesn’t write its own plan. China’s policymaking strategy emanates from top leadership in Beijing, Mr. Polk said, and Shanghai is “the mechanism” for spearheading implementation. For instance, Mr. Polk said, the faster the yuan is internationalized, the more Shanghai can develop as a financial center.

The current economic slowdown “puts more pressure on Shanghai” to introduce fresh financial sector policies, says Piter de Jong, managing director of ING Bank NV in Shanghai and chairman of the local branch of the European Union Chamber of Commerce in China.

“The potential is enormous but the potential can only be realized if they open up more,” Mr. de Jong said. He said more exciting financial reforms, such as with the currency, are these days happening in Hong Kong.

In Shanghai, 67-year-old Mr. Yu has had virtually no public profile though he chuckled Tuesday to reporters that he didn’t really need an introduction. Shanghai’s decelerating growth and rising prices during his tenure since 2007 have spawned jokes in the local dialect that play on his name — one calls him a “fish-vegetable-chicken” — and are blocked by Chinese Internet censors.

Mr. Han, 58, is one of Shanghai’s longest serving mayors – he took the post in 2003 – and a political survivor. He stood ramrod straight Tuesday wearing a dark suit and light blue tie.

In September 2006, his then-boss Chen Liangyu was removed as Shanghai party secretary in a major corruption scandal that cascaded through the local leadership and was arguably China’s biggest political shakeup before this year’s fall of Mr. Bo in Chongqing. But Mr. Han remained standing, taking the top party post in Shanghai on an acting basis until he was replaced by China’s presumed next leader, Xi Jinping, in a brief tenure that preceded Mr. Yu’s arrival.

A city of big things, Shanghai will soon be home to Asia’s biggest Disneyland. But its middling economic performance recently means Shanghai is no longer the leading edge of China’s growth story.

Shanghai’s 7% first quarter growth rate was the lowest among China’s provinces and municipalities. Industrial production gained just 0.7% in the first quarter, while fixed asset investment slid slightly in the first four months of the year.

Like elsewhere in China, its property prices face downward pressure. For the first quarter, the volume of activity in new home sales was off 15.5% from the year before and 17.5% in value. Shanghai is increasingly regarded as a world-class city and property agency Knight Frank LLP says at $7714 per square meter in the first quarter, luxury real estate was priced only a quarter of Hong Kong values.

But in Chinese terms, real estate prices nevertheless remain high: the average cost of a new home in Shanghai in 2011 was $411,483, according to figures from China Real Estate Information Corp. Local annual incomes were only 2% of that figure, according to the Shanghai Daily newspaper. Driving too is pricey: its costs over $10,000 to register a car.

Shanghai’s container handling port was the busiest in the world last year. Yet both exports and imports were lower in April, by 5.6% and 1.6%, than the same month a year earlier.

One of Shanghai’s biggest challenges is demographic. Almost a quarter of its residents are 60 years or older, and local statisticians say the city has one of the lowest birthrates in the world.