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Test – Correction - Two Asian World Cities: Shanghai and Singapore [CA v1.0] Use the following documents to write an essay (of 1 or 2 pages) about Two Asian World Cities: Shanghai and Singapore.
Table of Contents 1. The Rise of Asia: Two Main Hubs of the Asian Ports Network and Communication System........................................................................................................................2 2. The Rise of Asia: Industrial Growth driven by Exports and Education.....................5 3. The Rise of Asia: Finance, the Growth Relay for the Future.....................................7 Whereas Shanghai is the economic and financial capital (24 million inhabitants in 2013) of the People's Republic of China (PRC) in North-East Asia, Singapore is a small island citystate (5 million inhabitants) in South-East Asia. The communist PRC, founded in 1949, is currently World's No. 2 economy (or No. 1 in gross domestic product in purchasing power parity in 2013 according to the World Bank) but remains a poor country ($6,100 GDP per capita, World Bank, 2012). With an extremely impressive economic growth since 1980 (GDP +10% a year), it's the leader of the BRICS (Brazil, Russia, India, China, South Africa) the most powerful emerging countries. The Republic of Singapore, a former British trading post founded in 1819 and independent in 1965, belongs today to the rich (so called "developed") countries league with a GDP/capita ($52,000 in 2012) higher than in the U.S. or France ($40,000).
[source]
Their strong growth being fuelled by the rise of Asia [video] (maybe leading to an Asian Century?), both Shanghai and Singapore are now global cities (also called world cities) i.e. important nodes - by their political, economical and cultural power - in the capitalist neoliberal economic system (the brainchild of economists Friedrich Hayek and Milton Friedman) a scion or associate of globalization, the process of international integration which has been gaining steam since the 1980s.
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1. The Rise of Asia: Two Main Hubs of the Asian Ports Network and Communication System •
A transport hub (also transport interchange) is a place where passengers and cargo are exchanged between vehicles/transport modes. Public transport hubs include ports, train stations, rapid transit stations, airports...
•
According to the map, all of the top ten world container shipping ports are in Asia in 2012 (seven on the PRC coast!). As the driver of global trade, the Asia-Pacific region has the world’s three largest container ports: Shanghai (1 st), Singapore (2nd)
and Hong Kong.
[source]
Most of this maritime traffic is not bound for the Nafta trade bloc or the European Union but to other places in Asia (ex.: 90% of sailings in Singapore):
•
40
Port of Singapore Authority, Daily Sailings to ...
35 30 25 20 15 10 5 0
[source]
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Located in the Yangtze River Delta in East China, Shanghai sits at the mouth of the Yangtze in the middle portion of the PRC coast. According to the 2012 data, Shanghai has been handling 32.5 million TEUs (33.8 in 2013). The TEU ('Twenty-foot Equivalent Unit'): is the industry standard to measure freight containers. A 20-foot container's dimensions are twenty feet long (6.1 meters) and eight feet wide (2.4 meters). The
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Port of Shanghai comprises a deep-sea port (Yangshan) and a river port. The river port of Shanghai faces the East China Sea to the east, and Hangzhou Bay to the south. It includes the confluences of the Yangtze River and Huangpu River. The Yangshan Port is built on the Yangshan islands with fill from land reclamation. It's a deepwater port for container ships in Hangzhou Bay (12+ million TEUs in 2011):
The fourth phase, expected to open in 2015, will add 4 million TEUs to the port's annual capacity. When complete, the port will have 30 berths capable of handling 15 million TEUs annually. The Donghai Bridge (opened in 2005, 32.5 km six-lane highway) links it to Southeast Shanghai:
[source]
On January 2014, Shanghai's urban planning authorities announced that they would build a second bridge combining road and rail to help meet growing transport demands for the Yangshan port. Another giant trans-oceanic bridge (35,7 km) has been built across Hangzhou Bay to the Port of Ningbo at Beilun:
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[source]
•
The Shanghai Pudong International Airport is the primary international airport serving Shanghai (the city's other major airport, Hongqiao, mainly serves domestic flights). Located about 30 km east of the city centre, the airport is a major international hub for Air China. Pudong Airport served a total of 40,600,000 passengers in 2010, making it the 20th busiest in the world. About half of its total passenger traffic is international. A third passenger terminal is planned for 2015, raising its annual capacity to 80 million. As of December 2011, Pudong Airport hosted 87 airlines serving 194 destinations. It's also an Asian-Pacific cargo hub for UPS and DHL. With 3,227,914 metric tonnes handled in 2010, the airport is the world's third busiest airport by cargo traffic. Pudong Airport is connected to the city's urban rail network through Metro Line 2 and the famous Shanghai Maglev Train (2004, 431 km/h max.; video).
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Singapore’s strategic location at the nexus of major shipping routes has made it the world’s top transshipment hub [link to picture]. Transshipment is the transfer of goods/containers from one vessel to another vessel bound for its final destination, whereas in transit. Many small feeder vessels bring containers to Singapore. At the Port of Singapore, these containers get loaded onto large vessels which will then carry the shipment to their final destination. About 85 per cent of the containers that arrive in Singapore are transshipped to another port of call.
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Every two-three minutes, there's an arrival/departure from Singapore's harbour. At any time, there are about 1,000 ships in the port and it's the focal point of some 200 shipping lines with connections to 600 ports in 123 countries.
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As we can observe on the Pasir Panjang photograph, it's a very advanced (construction began in 1993 and it opened in 2000) and busy terminal with berths up to 16 metres deep and quay cranes able to reach across 23 rows of containers to accommodate the world's largest container ships [source]. The Port of Singapore Authority (PSA) is currently expanding (2012-2020) Pasir Panjang Terminal in order to increase PSA's total port capacity to 50 million TEUs (PSA handled 31.7 million TEUs in 2012).
•
Singapore Airlines fly to 60 cities in 30 countries with a modern fleet of 104 aircraft (2014).
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2. The Rise of Asia: Industrial Growth driven by Exports and Education Some standard characteristics of world cities are: •
Considerable decision-making power on a daily basis and at a global level
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Domination of the trade and economy of a large surrounding area
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Headquarters of several multinational corporations
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Centres of media and communications for global networks
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An Economic Growth Story: according to the extremely influential U.S. economist Jeffrey Sachs, China's last decades growth is "the most successful development story in world history". In 1991-1992, economic reforms were enacted to encourage investment in Shanghai. The 2012 Atlantic article explains that Shanghai's GDP keeps doubling every year since 1990 and that it's "already the size of Finland". For the past decade, annual economic growth in Shanghai has measured an astonishing +9-15%. The GDP of Shanghai region is nearly equivalent to half the size of the economy of the Republic of India (population: 1.1 billion).
•
A Growth driven by industry and exports: in 2011, PRC's GDP was up 9.2% but the industrial growth was +14%. In the World Bank's measure of exports share of GDP, Singapore finished second with 211% in 2010 (U.S.A.: 13%). According to the state's own figures, net exports of goods and services accounted for nearly 30% of GDP in 2011. Income derived by companies in Singapore is taxed at a flat rate of 17%, to encourage new investment and maintain a conducive business environment. A start-up tax exemption scheme was introduced in 2004 for the first three years of operations of newly-incorporated companies.
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Shanghai’s Deep Hinterland ("the land behind"): Shanghai's influence extends throughout the whole Yangtze Delta region, the richest area in the PRC. The Shanghai region, including the two adjoining provinces, accounts for 30% of the PRC's foreign exports and attracts 25% of all foreign investments into the country, while 20% of its manufacturing output is produced here.
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Rising Education Levels: the 2007 World Bank Report on globalization notes that "rising education levels were also important, boosting Asian growth on average by 0.75 to 2 percentage points.". China's illiteracy rate is down to less than 7% ( 40% in 1950). Singapore's schools are pressure cookers of high-stake exams, where the overwhelming focus is on learning examinable skills and STEM courses. Singapore is routinely at the top (ranks 2nd-3rd in 2012) of the Program for International Student Assessment (PISA) by the Organisation for Economic Co-operation and Development (OECD), well ahead of American (24th-36th) or French (21th-26th) scores. But these impressive results are mightily crushed (+5%) by the world No. 1: Shanghai. Amongst standard characteristics of world cities are: high-quality educational institutions, including renowned universities and research facilities. On Singapore map, we can notice: China textile University, East China Normal University, Fudan University, etc.
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The Hi-Techs Pivoting: thanks to their educational achievements, the PRC and Singapore are striving to increase the value added by their manufacturing. A remarkable feat has already been achieved by Singapore: "50% […] of exports are in high-technology" (ex.: electronic) beating IT giant Samsung Group's country (South Korea), which is no slouch either, to the finish line. It's life or death for Singapore as it has no natural resources. The Chinese government and Shanghai are feverishly following the trailblazing Singapore: since 2004-2005, the PRC is the 1 st exporter of hi-techs products and the Milken Institute graphic shows that it was already in 2009
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more than a quarter of manufactured exports. Shanghai's Eastern district Pudong is, in fact, mostly a technopolis (or science park). •
Glittering Metropolis and Multinationals HQs: Shanghai has more skyscrapers than New York City (NYC) and a public transport system that will soon overtake
Illustration 1: The Jin Mao Tower (1999) in Pudong, August, 2004 (88-storey, 420 metres): private apartments and a 5* luxury hotel. London's in size. More than 500 multinationals, ranging from U.S. General Motors Company (GM) to Volkswagen, have their regional corporate headquarters (HQs) in Shanghai. The growing middleclass fuelled a consumer and property boom. Western shops dominates the pedestrianised shopping street of Nanjing Road, and the former French concession (1849-1946) includes the world's busiest H&M women's clothing store. Fancy restaurants by famous chefs now line the curving waterfront Bund. Singapore island is small in size but big in shopping opportunities. •
Not so rosy?: there may be some bumps on the road to success. The competitive advantage offered by Singapore's geostrategic location could be put in jeopardy one day with Myanmar (former Burma) opening and potential new shipping route. The PRC has still a heavy communist bureaucracy and a appalling "rule of law": if Singapore is at the first rank on "ease of doing business" (it takes only three days to start a business), China ranks 91 th and the time to start a business is 38 days. Enforcing debt contracts requires 241 days in China (69 days in Singapore) [source]. Like in the rest of the PRC, corruption and pollution (ex.: in February and March 2013, thousands of pig carcasses were found floating in the Huangpu River) are also a big
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concern in Shanghai.
3. The Rise of Asia: Finance, the Growth Relay for the Future •
The abundance and variety of international financial institutions (ex.: stock exchange) and services (banking insurance, real estate, accountancy...) is amongst the main characteristics of global cities.
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As the two photographs vividly show, in 1990, Pudong (located along the east side of the Huangpu River) "was mostly farmland" and swamps, today it's "densely studded with towers of glass and steel". "Only slightly smaller than the entire city of Chicago", it's "the global financial center of China".
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Shanghai has a stock exchange since 1990. Shanghai Stock Exchange is the world's 7th largest stock market by market capitalization at $2.5 trillion as of December, 2012.
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The Charging Bull (1989) is a 3,200-kilogram bronze sculpture by Arturo Di Modica that stands in Bowling Green Park near Wall Street in Manhattan, New York City. It's both a popular tourist destination which draws thousands of people a day, as well as "one of the most iconic images of New York", symbolizing the Financial District. The same Italian American artist unveiled the Bund Bull in Shanghai on May, 2010. The work of art is said to have the same height and length as the Wall Street Bull. The city requested a bull that was younger and stronger than New York City's bull to symbolise "the energy of Shanghai's economy", Zhou Wei, the head of Huangpu district said. "That's why the head of the Bund's bull looks up while the Wall Street Bull looks downward," he added. According to Di Modica: "It must be strong. It's about a strong nation":
. [source1 & source2]
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Singapore Exchange Limited is a lot smaller (ranks 20th, $0.76 trillion Market Cap.)
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than the Shanghai Stock Exchange. But over the years, the GDP contribution of financial services in Singapore has risen from 6% in the 1970s to 11% in 2012 [source]. The increasing affluence of the domestic population in Singapore and growing regional wealth (e.g. in Indonesia, Thailand, China and India) presents attractive markets for financial services providers. By the end of 2010 Singapore had over 600 local and foreign financial institutions, including 38 offshore banks; financial institutions had assets under management of US$1.33 trillion (2012). Of this, $550 billion was in the wealth management sector in 2010, according to one estimate, eclipsing Hong Kong’s approximately $250 billion. The 2007 Survey was the last report to indicate sources of funds, with 44% from the Asia-Pacific region, and 25% from Europe. Singapore is arguably the world’s fastest-growing centre for private wealth management (i.e. the "Asian Switzerland"). A WeathInsight report in April 2013 expects it to overtake Switzerland by 2020 as the world’s largest offshore wealth centre. Singapore’s financial centre has thrived for several reasons. First a long history of light-touch trade regulations naturally evolved into an ask-noquestions offshore financial model. Second, it has benefited from its location as a hub for south-east Asia, with its booming economies. Third, it has a reputation for respecting the rule of law more than other regional jurisdictions. Fourth, its big regional rival, Hong Kong, is under PRC’s shadow, deterring many potential capital owners there. Singapore is also a tax haven, providing numerous tax-avoidance and evasion opportunities: there is full tax exemption for foreign-sourced income received in Singapore by any individual not resident in Singapore; there is an absence of capital gains, gift or estate taxes. According to the Washington-based International Consortium of Investigative Journalists (ICIJ)’s 2013 investigation, Deutsche Bank’s Singapore branch, for instance, is found to have helped create or manage 309 offshore companies and trusts in the British Virgin Islands and other tax havens.
