China's billion-dollar shine on 'pearl of the Orient'

China is becoming a developed country inside a developing country. Nothing symbolizes this more than the city of Shanghai, winner last week of the 2010 World Expo.

The leaders of the world's most populous country have pumped $300 billion into Shanghai in the past decade - more than half the capital China has attracted - to buy a skyline of designer TV towers, bridges, hotels, and office buildings. With news last Friday of an $870 million Universal Studios theme park going in downtown Shanghai by 2006, and China's first magnetic levitation train to preview on Jan. 1, that appears to be just start-up money.

Shanghai is China's official heroic dream about the future: a free-market mecca in a Communist state; the ultimate high-tech "tomorrow-land" in a country that has 800 million peasants; a laboratory of change in what was once the urban heart of Mao Zedong's revolution and, later, brutal purges. It's even home to Yao Ming, the No. 1 draft pick of the NBA's Houston Rockets this year.

Now, after winning the 2008 Summer Games for Beijing last year, China's capture of the 2010 World Expo - the "Olympics" of economics, culture, science, and technology - shows that officials here have learned how to play the game of the outside world.

"They've learned how to bid, how to respect and estimate the competition, and how to creatively and diligently present their own case," says a diplomat in Beijing. "They are the first developing country to hold an expo, and they will spend billions on it. It's a major image issue for them. Chinese think, 'This must succeed.' "

China's currency is not yet convertible, a fact that now blocks Shanghai's expectation of taking over Hong Kong's status as the financial hub of Asia. But with every new big-dollar project, Shanghai's aggressive rise is a potential threat even to Tokyo one day, Japanese analysts say, as Tokyo's economic preeminence in East Asia continues to fall along with the yen.

China is not only restoring the luster of the colonial-era "pearl of the Orient" but is outdoing that earlier glory. The World Bank estimated that it would take three years to clear the neglected downtown in the early 1990s when Deng Xiaoping ordered Shanghai's revitalization. With teams working 24 hours a day, it took 13 months. Joe Studwell, author of "The China Dream," says it took London and Tokyo a decade after World War II to do what Shanghai has done in five years.

Outgoing President Jiang Zemin is from Shanghai, as is his closest protégé, Zeng Qinghong - a new member of the Standing Committee of the Politburo. Mr. Zeng's emerging power was signaled last week when state-controlled Xinhua news announced that he would take over the influential Communist Party school in Beijing.

Nor is there a let up in spending on the Shanghai dream:

• In coming years Shanghai will spend $10 billion to clean and embank the winding Huanpu river, to create a local "Seine of the Orient." Other "green" projects include a 45-mile-long forest belt to be planted outside the city.

• As soon as Jan. 1, Shanghai will christen its new $1 billion high-speed magnetic levitation train, with speeds of 200 mph, that links the new international airport with the city's financial center. The German-Chinese collaboration will make China the first developing country to sport such technology.

• Last week, Universal Parks and Resorts edged out Disney for the front-running position to create a theme park in Pudong, the newly constructed financial heart of Shanghai. Universal will put up a reported $100 million, with the rest coming from local firms.

"The message is clear," says the diplomat. "The Chinese are saying to the world, 'We are safe, we are stable, we are prosperous, and we are willing to spend with no discernable limits.' "

Last week, Shanghai Volkswagen announced sales of some 500,000 cars in 2002 - a 40 percent growth figure that makes China its biggest market outside Germany. Next year, the German automaker will introduce its Golf vehicle, called "Gol" in China, which at about $12,000 will be an attractive "first buyers" car.