A model city

Shanghai is being sculpted into the ideal of a modern Chinese city. It’s also becoming China’s centre for scientific innovation, as Victoria Gill reports

In the Urban Planning Exhibition Centre in Shanghai there is a breathtaking scale model of the city showing how it will look in 2020. It maps in minute detail every building, every street and every patch of green space. It’s a model for Shanghai - but it’s also said to be the model for modern urban China itself.  

Shanghai, already a buzzing metropolis of more than 13 million people, continues to grow. Many of the buildings in the urban planning model are made from transparent plastic, indicating that they haven’t yet been built, but the pace of development and the dedication to this meticulously detailed plan is nothing short of intimidating.  

The cityscape is peppered by the swivelling long necks of cranes and scaffolding as building continues at a frantic pace.  

In 1990, the business district, Pudong New Area, was farmland - stretches of fields and tiny shacks. The government’s plan to develop it into a ’special economic zone’ came to fruition within 20 years, and Pudong now boasts a gleaming Manhattan-style skyline, home to banks and multinational corporations. 

But the city is fundamentally changing the way in which it is growing. It has gone from being a fishing port to a vast, industrial centre, profiting from its coastal position as an attractive location for foreign companies to trade. Now it’s evolving again, becoming a centre of knowledge and high technology. 

At the same time there is a very public, national move towards sustainability and environmental awareness. ’The government is putting more pressure on quasi-governmental organisations to aim for sustainable development - that means less focus on manufacturing,’ says Andy Scott, editor of China Briefing Media, a business advisory magazine based in Shanghai. ’Shanghai is becoming like London - moving into service and hi-tech industries. They are now the only ones that can survive in the environment.’ 

That political pressure has led to a policy reform that was implemented on 1 December 2007. The new rules from the Chinese Ministry of Commerce and the National Development and Reform Commission set out whether direct foreign investment is encouraged, restricted or prohibited from certain industries. Clean technology is seen, unsurprisingly, as a key area of growth. 

But Shanghai is already far ahead of this trend. Laura Mitchelson is a business analyst for consulting firm Amber - China Industry Insights in Shanghai. ’One thing China is famous for is showcases, and Shanghai is the ultimate showcase. It has been the test bed for new schemes and policies, and people in Shanghai are quick to accept the changes,’ she says. ’There’s an amazing ’can do’ attitude here, and because it is already a developed commercial centre, Shanghai has long been able to pick and choose the foreign investment it accepts.’  

As the trendsetter for urban and commercial development, the spotlight now falls on Shanghai to set the example for sustainability.  

Chemical growth 

Travelling to the Shanghai Chemical Industry Park (Scip) takes us through thick downtown traffic, skilfully negotiated by one of the city’s notoriously daring taxi drivers. Despite keeping my eyes firmly closed during some of the more audacious lane changes, I have more than an hour to soak up the view, which is punctuated by huge, semi-built apartment complexes lining the highway almost the whole way to the park. 

Space is at a premium in this area of China, and most of the land for Scip was created by reclamation from the sea. The park now encompasses 30 square kilometres, and there is a plan to more than double that area in the next 5 to 10 years.  

According to a 2006 report from the Chinese ministry of land and social security, 40 million Chinese farmers have had all or part of their land used for development as China’s building programme has gone into overdrive. Land reclamation is a less disruptive way to develop large areas such as Scip, explains Li Yu Ying from the economic and trade department of Scip Development, the state-owned administration company that runs the park. ’A small portion of the north of the site was originally farmland, but the majority was reclaimed from the sea,’ she says, adding that Chinese fishermen in the region were compensated for their loss of income before the development plans were finalised in 2000. ’The sea is also our main method of transportation - the park has its own specialised port.’ 

The government’s aim in reforming its investment policy has been to discourage foreign investment in industries that put a strain on resources and the environment. But the country is still very keen to welcome the international chemical industry, which is playing a major role in literally fuelling China’s growth. ’Our domestic chemical industry has seriously lagged behind other manufacturing, especially textiles,’ says Ying. ’We want to attract international chemical companies to bring their experience to China.’ 

The multinational chemical companies that have invested in Scip are engaging in sustainable development programmes. A fundamental part of this is that Scip itself is designed in three phases, each to be developed downstream of the previous, in order to build a fully integrated park. Most of the investors so far are large foreign companies at the top end of the chemical production chain. BP, for example, has a 900,000 tonne per year ethylene cracker on the site. But the biggest moves to invest have come from Germany, with Evonik (formerly Degussa), BASF, Linde and Bayer situating plants here.  

German connection 

Bayer, the first and biggest international investor, has so far spent 3.1 billion yuan (?202 million) on its own integrated site, which is already producing polyurethane pre-cursors, polycarbonate, raw materials for coatings (such as aliphatic and aromatic isocyanates), and chlorine. The company is planning a total investment of up to ?900 million. This already extends to paying for a training programme for workers and running private buses for its employees to and from downtown Shanghai. By 2010 there will be a direct rail link between the park and the city.  

Producers on the park have direct pipeline to Shanghai Petroleum Company and Sinopec, the two principal domestic investors. By 2010, the goal is to have 4 million tonnes per year of ethylene and 30 million tonnes of petrochemicals produced on site.  

It’s a large-scale development plan on a very rapid schedule. Despite this, Scip’s administrators put a great deal of emphasis on their dedication to environmental obligations. Ying explains that the specially selected coastal location reduces both water and air pollution. ’We aren’t forced to pump waste into the river and the prevailing winds are south-westerly - away from residential areas and towards the coast.’ River pollution has become a major embarrassment for China - last year a record-breaking 30.5 billion tonnes of waste were pumped into the Yangtze River, for example.  

Like many other modern Chinese chemical plants, Scip has hired consultants from the US and Europe to help it attain UN Environmental Programme accreditation as an ’Eco industrial park’. The same status has already been granted to 16 plants in China.  

Bayer has also given $1 million to Shanghai’s Tongji University, to establish a chair in sustainable development. The new professor, Du Qun, was due to start her new post on 1 January 2008 as Chemistry World  went to press. Her role is to provide support for advanced education and research into emerging environmental technologies. Her research will also aim to support ongoing sustainable development projects in China that cover economic, social and environmental factors. 

But Scott cautions that such high profile ventures are not necessarily reproducible throughout such a vast country, which, according to the UK’s Foreign Office, was still building two coal-fired power stations per week in 2006 to keep up with energy demands. ’I don’t think it’s a workable model,’ he says. ’The policy change and the work with the UNEP is just the government’s way of showing that they are answering the call for a more sustainable future.’ 

Mitchelson also points out that China is far too large to be considered as a single economy that will be able to reproduce the impressive Shanghai model. ’There are very large cities in the far North of China that will never be able to replicate this sort of development,’ she says. 

The move to hi-tech  

Shanghai itself is a very developed city within a developing country. In the crowded centre, imposing modern buildings jostle with hotels, restaurants and bars that have thrived from the increasingly wealthy and international population. Travelling though the city, there is the occasional glimpse of a traditional Chinese street lined with tiny wooden houses, but there is little room left for such alleys in Shanghai’s grander urban plan.  

The cost of land has already become prohibitive for some investors. ’Big manufacturers are getting out - it’s simply too expensive for them,’ says Scott. ’The major ports are also moving south from Shanghai, where specialised container ports are being developed.’  

When it was planned, the business district of Pudong was systematically divided into a number of ’economic development zones’, one of which, Zhangjiang Hi-Tech Park, is a hub of China’s pharmaceutical R&D. The park was launched by a 1996 co-operation agreement between the Ministry of Science and Technology, the Ministry of Health, the Chinese Academy of Science, the State Food and Drug Administration, and Shanghai Municipality. This large collaboration made biopharmaceuticals a priority. The full development plan for Zhangjiang was announced in 1999 - it would become Shanghai’s centre for innovation in IT and biopharmaceutical industries. According to the state-owned administration company that runs the park, it is a ’world class scientific town - just like Silicon Valley’. 

The headquarters of Zhangjiang Group, the park’s administration company, is a pristine glass building with a specially designed Chinese garden and fountain incorporated into the foyer - a sample of traditional China squeezed into the imposing modern development typical of today’s Shanghai. Yin Hong, spokesperson for Shanghai Zhangjiang Group, proudly explained to me his view of why the park is such an achievement.  

’Hi-tech park is a special name,’ he says. ’The areas in the rest of Pudong were simply called "economic development zones", but the aim of this was to be hi-tech from the outset.’  

’This is a specific goal of the Shanghai government,’ says Scott. ’If you get R&D, you get jobs for university graduates, and Shanghai has some of the most important schools in China.’  

Hong agrees - Zhangjiang Group offers recruitment services for park investors to access this increasing pool of what he refers to as hi-tech talent. 

Since China joined the World Trade Organization (WTO) in 2001, foreign pharmaceutical companies have been persuaded to locate R&D in the country, along with the manufacturing plants they already had. Zhangjiang has specifically courted multinational companies including Novartis, Pfizer, AstraZeneca, Dow and DuPont to set up R&D centres in the park, along with Chinese biotechnology and pharmaceutical companies. 

Pharma bonanza  

Pfizer led the flurry of investment from foreign pharmaceutical companies by locating its Chinese Regional Headquarters and a clinical trial centre in the park in 2004, which it operates in collaboration with selected local hospitals. Switzerland-based Roche opened its own Chinese R&D headquarters in the park in 2005, starting tentatively with medicinal chemistry to ’support’ its existing R&D by concentrating on the development of chemical building blocks and focused libraries. 

And Novartis’ ?50 million biomedical research centre, which opened in 2007, specifically focuses on diseases prevalent in China, particularly certain cancers and hepatitis. The company, which has described Shanghai as a new global epicentre of science, has embarked on research at its centre that combines traditional Chinese medicine with modern chemical and biotechnological approaches (see Chemistry World, May 2007, p46).  

Hong also highlights the comprehensive intellectual property protection that has persuaded these companies to enter the Chinese market, explaining that Zhangjiang has developed a forum for businesses to seek IP advice.  

’The Shanghai government is extremely smart in managing [Zhangjiang],’ says Benjamin Bai, a lawyer from US firm Jones Day who specialises in Chinese patent law. ’They know that, to be successful, they have to attract the venture capitalists and the international law firms, so everything has to be up to the international standards. 

’They invite law firms to participate - local law firms as well as international. It’s a way to stimulate innovation, and in the next five years you’re going to see some of those companies enter the Hong Kong or London stock exchange, and perhaps NASDAQ. Many millionaires will be made in the next five years,’ Bai says. 

When Shanghai hosts the World Exposition in 2010, it will be a chance for the city to prove just how far it has come to a new international audience. This will be the first exposition to be held in a developing country, and the city attributes its successful bid for the event to support from the international community. But the 
can-do attitude of the Shanghai people has undoubtedly played a very significant part.