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Shanghai Rise to Economic Powerhouse in China

Barsbold Baatarsuren
Barsbold Baatarsuren Travel tips May 05 min read
Shanghai Rise to Economic Powerhouse in China

Shanghai's past is entwined with that of China. When the city expanded, so did the country's economy, resulting in an influx of immigrants looking for jobs and trade. But why was Shanghai, of all the Chinese cities, the most prosperous?

Shanghai's bank account continues to grow. Throughout the 1990s and 2000s, the city experienced consistent annual economic growth of between 9% and 15%. Shanghai currently accounts for 3.63 percent of China's total GDP. Given that the city's land area accounts for just 0.1 percent of the country's total, this is a consistently impressive figure, highlighting the city's economic power.


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Reforms and trade liberalization

Prior to the start of economic reforms and trade liberalization nearly 40 years ago, China's policies held the economy weak, sluggish, centrally regulated, vastly inefficient, and disconnected from the rest of the world. China has been one of the world's fastest-growing economies since opening up to international trade and investment and introducing free-market reforms in 1979, with real annual gross domestic product (GDP) growth averaging 9.5 percent through 2018, according to the World Bank, the "fastest sustained expansion by a global economy in history."

China has been able to double its GDP every eight years on average, lifting an estimated 800 million people out of poverty. China has surpassed the United States as the world's largest country, producer, merchandise broker, and holder of foreign exchange reserves (on a purchasing power parity basis). As a result, China has become one of America's most important trading partners. China is the United States' largest merchandise trading partner, largest import source, and third-largest export market. China is also the largest international holder of US Treasury bonds, which help finance the federal debt and keep interest rates down in the United States.

shanghai

Geographical costs

Shanghai's monetary success has a straightforward explanation: geography. Almost every capital or economically prosperous city on the planet is close to an ocean or a river, providing convenient access to neighboring countries. Cities such as London are examples of this. The UK capital is situated on the country's largest river and not far inland from the Channel, which connects France to Cairo, allowing the city to benefit from a plethora of trade opportunities. Though Beijing is China's capital, Shanghai wields all of the country's economic power due to its size.

Shanghai is a port city on China's coast, halfway down the country's coast, where the country protrudes into the East China Sea. The city sits on the edge of the huge Yangtze River, which also leads inland to the former capital of Nanjing and the center of China itself, allowing easy access by ship to China's neighboring countries. Given all of this, Shanghai is a gold mine of a trading location and one of the world's most influential trading positions.


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The building blocks of a great city

So, how did Shanghai go from being a small fishing village to a global economic powerhouse?

The city began as a small fishing village near the mouth of the Huangpu River, which was strategically located on the coast. When the Jin Dynasty came to power in the 4th century, it started to strengthen China's fishing industry, as well as Shanghai's. The first garrison in what would later become Shanghai was established by the Tang Dynasty in the 7th century, transforming the fishing village into a small military town.

During the Ming Dynasty (1368–1644), China's military might steadily expanded, and what had once been a fishing village gradually transformed into a formidable fortress, complete with fortified defenses against Japanese pirates. As a result, China now had a militarized presence on its coast, complete with strong houses, its own currency, and high walls, all of which were the makings of a great city.

Invasion by the British

The world was increasingly commercialising during the Qing Dynasty. This was China's last dynasty before the Republic was established, and it started in the 17th century. The seas were owned by the United Kingdom, Spain, Portugal, and the Netherlands. Over the previous 200 years, Shanghai had evolved from a fortified city to a flourishing commercial center, trading silk and cotton with Polynesia. The British saw a lucrative opportunity when they arrived in 1832.

What followed was a rapid and barbaric act of colonialism, according to several accounts. The British East India Company saw a city that was already trading economically and serving as a gateway to the rest of China through the Yangtze River. China was adamant about not letting them in, so the British won the First Opium War, which resulted in the Treaty of Nanjing. This opened Shanghai to British, French, American, and German merchants and diplomats.

The city was already a well-established trading center, but during the nineteenth century, many of these international nations turned it into a thriving metropolis. The Europeans could trade with all of China and its neighbors from here, and Shanghai became the wealthiest city in East Asia in the blink of an eye.

Mao's era to today's megacities

The collapse of the Qing Dynasty and the rise of the Republic of China in the twentieth century resulted in Mao Zedong's People's Republic of China. Despite the fact that Mao's dictatorship caused a famine, Shanghai had already developed itself as the country's most technologically advanced city.

During the Qing Dynasty, foreign business infrastructure, trade ships, and train networks were already in operation. This meant that, although Shanghai's economy stagnated during Mao's reign (as did the rest of China), it recovered relatively quickly after his death.

China had completely opened up to free markets by the 1990s, paving the way for a more open Capitalist economy. By lowering taxes and promoting foreign trade, Premier Zhu Rongji poured money and energy into Shanghai. He enticed foreign investment into the city, and it flooded in.

This is the Shanghai we know today, a city with centuries of international connections that has established trade links into central China and around the world. It is East Asia's most important trade and travel centre, as well as China's economic powerhouse.

China had completely opened up to free markets by the 1990s, paving the way for a more open Capitalist economy. By lowering taxes and promoting foreign trade, Premier Zhu Rongji poured money and energy into Shanghai. He enticed foreign investment into the city, and it flooded in. This is the Shanghai we know today, a city with centuries of international connections that has established trade links into central China and around the world. It is East Asia's most important trade and travel centre, as well as China's economic powerhouse.

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