China's Shanghai is New York on steroids

A display of luxury goods is seen in a storefront window in Shanghai, a city of skyscrapers, big money and constant construction.
A display of luxury goods is seen in a storefront window in Shanghai, a city of skyscrapers, big money and constant construction. Tom Lasseter/MCT

SHANGHAI — Stephen Wong strolled out of the Porsche dealership with a bounce in his step, having just spent time looking over a silver beast of a sports car with beautiful lines and curves that made his 25-year-old heart ache.

Standing on the stairs outside and gazing at the lights of this mega-city of some 18 million residents — give or take a million or two — Wong said he was certain that someday the car would be his. Never mind that he's an office clerk with a monthly salary that wouldn't pay for a set of tires for a Porsche 911. Never mind that the world is battling the worst recession in more than half a century. Never mind that the financial crisis has stomped China's export markets.

Forget all of that: This is Shanghai, New York with more bustle, an appetite for hyperbole that rivals Dubai's and a strut that would make Wall Street blush.

As Beijing's $585 billion stimulus package bankrolled China's world-beating growth this year, Shanghai has remained the country's capital of swagger — and swag.

Although the port city's economic growth through June was reportedly its slowest first half since 1992, in upscale neighborhoods Louis Vuitton bags still seem to grow on cafe tables and Maseratis dart around beat-up taxis in noonday traffic.

There are questions aplenty about how strong China's financial fundamentals are, but most Shanghai residents don't have time for that kind of talk when there's cash to be borrowed, made or spent.

The result is a striking, if unspoken, tension between the sparkle and glitz on top and the complex issues in the shadows. Is the city riding an investment bubble funded by the government's bailout spending? How will things look after the stimulus plan stops? What happens if Americans stop buying so much stuff from China? Can China shift from an export-driven economy to one fueled by domestic consumption?

Or perhaps the country's future is so robust that those sorts of problems can be worked out along the way.

Wong, for one, couldn't care less.

"I've been thinking about buying a Porsche," he said in a confident tone before wading back into the crowds milling along the luxury boutiques of Nanjing Road, Shanghai's answer to Rodeo Drive. But bigger.

A recent report by the consulting firm McKinsey & Co. predicted that in less than a decade, China will have the world's fourth-largest concentration of wealthy people, jumping from 1.6 million households in 2008 to more than 4.4 million in 2015.

Many of them will be in Shanghai.

Asked about China's rich, the deputy head of an economics institute at Shanghai's Fudan University reminded a reporter that the affluent represent a small part of the population — about 1 percent of the urban work force, by some estimates.

A moment later, Yin Xingmin smiled and added that if the wealthy were to grow to just 5 percent of the country's 1.3 billion people there'd be about 65 million of them, "very similar to the population of France." In fact, a little bit bigger.

"Even in the downturn, China remains one of the world's few growth markets," the McKinsey report says.

That word — growth, GROWTH! — is spoken in bold letters and with exclamation marks here. By the banks of the Huangpu River, skyscrapers dominate the horizon in a series of geometric boasts of economic might, among them the Shanghai World Financial Center, whose roof disappears into the clouds and smog some 1,614 feet up in the air — taller by a football field than New York's Empire State Building.

Down below, the cash seems to flow in every direction.

Leaning back in a chair at a downtown stock brokerage this week, Zhu Yu was wearing dark sunglasses in a dimly lit room and watching people scoot from one computer screen to the next. Zhu, who owns four clothing shops, said he had about $298,000 in the Shanghai stock market and had lost 5 percent of his portfolio during the past half-year. His friends have lost a lot more, he said, so 5 percent isn't bad.

The market's benchmark composite index is a wild ride, down by more than 65 percent from October 2007 to November 2008, and then up by more than 90 percent earlier this year, followed by a 20 percent dip in August.

In talking about the market, Zhu sounded more than a bit like a gambler at a roulette table.

"I think that one day I'll make really big money," Zhu said. "It hasn't happened yet, but I know it's coming."

If he does, He Wei will be ready to sell him a Mercedes. In the showroom of a Mercedes-Benz dealership on Nanjing Road, He said that his business was up by about 20 percent this year.

Asked how that was possible, given the global downturn, He shook his head.

"It's not surprising at all; manufacturing might be affected by the financial crisis, but here in Shanghai we haven't been affected," said He, who was surrounded by sleek, black sedans that cost as much as $300,000.

During the first seven months of this year, as credit lines dried up in much of the West, lenders extended some $1.1 trillion in new loans to companies and households in China. "There's a ton of liquidity in the system. . . . I would not expect a significant slowing of credit growth over the next few years," said Stephen Green, the head of research for Standard Chartered Bank in China.

Even those hit hard in China's manufacturing and export sectors — the tip of the spear of the country's economic advance — said they were confident about the future.

Cecilia Xu owns a firm that ships goods overseas, mostly clothing to America and Europe. Business has dropped at least 40 percent since late last year, Xu said over an ice cream sundae at a Haagen-Dazs cafe in central Shanghai. Still, the 38-year-old with a large Louis Vuitton bag — locals call them "LVs" — and many rhinestones on her shoes didn't seem worried.

"I've made a lot of money, I'm still young and there are many chances ahead of me," Xu said. "I'm thinking about investing in other things, like restaurants. As long as it makes me money, I'll invest in it."

There is something that's been bothering her, though. Her purse seems a bit pedestrian.

"LVs have become the norm," Xu said, pondering the implications. "I'm thinking I need to buy an Hermes."


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