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Shanghai Gets the Entrepreneurial Spirit : China Seeks to Pump New Life Into Decaying Industrial Center

March 31, 1985|JIM MANN | Times Staff Writer

SHANGHAI — It began only two months ago. A group of factory managers, engineers and industry executives, with the blessing of the mayor of Shanghai, began holding regular meetings in an old hotel near the center of town.

Their purpose, a spokesman explained candidly, is to swap ideas "about how to make money."

The group is called the Shanghai Entrepreneurs' Club, and it is the first organization of its kind in Shanghai since Communist troops entered the city in May, 1949. The 500 or so members function something like an American chamber of commerce, openly propounding a business viewpoint to local government officials.

Still, as capitalist roads go, this is barely a dirt path. The club's members gather in a cavernous public ballroom, and they are a far cry from the businessmen who, before 1949, frequented the old Shanghai Club relaxing at what was called the world's longest bar.

Despite the organization's title, virtually all its members work for state-owned or collective enterprises, not for private businesses. They include Communist Party branch secretaries assigned to Shanghai factories.

Campaign Launched

Formation of the Entrepreneurs' Club is a reflection of the recent, belated attempt by Chinese officials to revive the flagging economy and the entrepreneurial spirit of Shanghai. In the past two months, worried authorities in Peking and municipal leaders in Shanghai have launched a campaign to infuse fresh life into China's most important, but now decaying, industrial center.

Chinese leaders have a lot riding on the future of Shanghai. Shanghai is China's New York, Pittsburgh and Detroit rolled into one--its center not only of trading and shipping but also of heavy industry. Shanghai accounts for one-ninth of China's entire industrial output and contributes one-sixth of its revenues.

The campaign is tinged with irony. Shanghai, which has 12 million people and is China's largest city, was once known as an entrepreneur's paradise. Its inhabitants have long been regarded as China's shrewdest wheelers and dealers.

Yet now, as China carries out a series of reforms aimed at giving free rein to profit incentives and individual initiative, government officials acknowledge that over the past 35 years Shanghai has become so linked to traditional socialist central planning that it will be difficult to change.

Indeed, according to a joke making the rounds, the last two places in China to carry out the new economic reform program will be Shanghai and Taiwan.

Presents 'Stern Challenge'

In December, during a visit to Shanghai, Premier Zhao Ziyang said that China's switch to a market-oriented economy presents a "stern challenge" to Shanghai.

"Shanghai is in a pretty grim situation because the time of cheap, state-allocated raw and processed materials and energy will soon be over," he warned.

The People's Daily, the organ of the Chinese Communist Party, said recently that "Shanghai's position as an important financial, commercial and shipping center in the Far East has been weakened." It said the decline results largely from "outmoded views" in Shanghai.

In what some see as the ultimate heresy for this stubbornly proud metropolis, Shanghai's newspapers lately have been lauding the virtues of Canton, which Shanghainese have long regarded as a provincial town inhabited by unsophisticated people.

But Canton is closer to Hong Kong and to China's special economic zone of Shenzhen, near the Hong Kong border, where the market-oriented reforms were first implemented. As a result, the Shanghai newspapers say, the spirit of individual initiative is more advanced in Canton.

"Cantonese self-employed workers are not afraid of making big money and showing their wealth," the Shanghai newspaper Wen Hui Bao said. It said that after a tour of Canton and surrounding areas, a group of Shanghai visitors concluded that "the contrast between the two cities is just too much."

Canton's population is only half that of Shanghai's, but a Shanghai newspaper recently noted that Canton has about 6,000 restaurants, of which 4,000 are privately owned, and that Shanghai has only 2,500. This is a tenth as many as Shanghai had in 1956, before Chinese officials began eliminating all traces of private ownership.

Economy Still Growing

Shanghai's economy is still growing. Last year, the city's industrial output increased by 9.5% over the previous year. But this figure is considerably less than the increase of 13.1% for China as a whole, according to the State Statistical Bureau.

Furthermore, most of the increase in Shanghai's output was simply a result of more people working more hours with more materials, rather than to any increase in efficiency.

"The rise in productivity has not been satisfactory," said Qin Benli, editor-in-chief of the Shanghai-based World Economic Herald.

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