A Study of Shanghai’s Development Strategy to 2020
Yizhi Wang
Institute of Information Science, Shanghai Academy of Social Sciences
Hiroyuki Shibusawa
Department of Architecture and Civil Engineering, Toyohashi University
Guoping Mao
School of Mathematics and Information Sciences, Jiaxing University
Yoshiro Higano
Institute of Life and Environment Sciences, University of Tsukuba
Edward Leman
Chreod Ltd
Abstract: Shanghai is the largest economic city in China. The dynamism of change in
China has brought new opportunities and challenges to Shanghai. Its rapid emergence asa post-industrial metropolis is causing fundamental shifts in the city’s economy and social
system, and therefore in its linkages with the wider Yangtze Delta Region which has
become China’s main engine of economic growth. The development circumstances andtrends of Chinese economy need Shanghai to become a global metropolis which having
five global functions as: 1) global financial center; 2) global trade and logistics center; 3)
global center for innovation-based manufacturing; 4) a creative metropolis; and 5) awell-functioning metropolis. Clearly, these five global roles are integrated, and that tobecome a truly global metropolis, each of these five roles needs to be developed intandem. This paper firstly presents Shanghai’s development strategy to 2020 –establishing five global centers; then this paper analyzes some key issues facing
Shanghai; and last, this paper puts forward some policy recommendations.
Key word:

Shanghai

Yangtze Delta Region

development strategy

globalmetropolis
1. Introduction

The dynamism of change in China has brought new opportunities and challenges toShanghai. Its rapid emergence as a post-industrial metropolis is causing fundamental
shifts in the city’s economy and social system, and therefore in its linkages with the wider
Yangtze Delta Region(YDR) which has become China’s main engine of economic
growth.
Shanghai is located in the east of Asian continent and the west coast of the Pacific,
1along the Yangtze River Delta front, in the north side of the estuary of the Yangtze River.
As China’s central coast, Shanghai has convenient transportation, vast hinterland, andsuperior geographical position (Fig.1 and Fig.2).

Source: www.59edu.com
Figure 1: Shanghai geographical position

Source: www.shanghai.gov.cn
Figure2:

Shanghai city2Given its geographic attributes and internal migrations, the Yangtze Delta has had thehighest population and settlement densities in China. It has been a distinct economic
region in China for centuries during which functional boundaries have periodically
expanded and contracted in response to political and natural calamities, and to
far-reaching economic and technological changes. Annual GDP growth for the YDR as awhole averaged 13% from 1997 to 2010, and Shanghai’s growth was at 12%, making theregion one of the fastest growing regional economies in Chinese history. These initiatives
are critical given the growing role that the YDR is playing in China’s economy.
The development of China’s economy has produced a great of flows and stocks
nearly 20 years. This requires China must have an international hub to absorb, storage,
digest, and divert these flows and stocks. Shanghai is the best candidate of international
hub in China. The development circumstances and trends of Chinese economy need
Shanghai to become a global metropolis which having five global functions as: 1) global
financial center; 2) global trade and logistics center; 3) global center for innovation-based
manufacturing; 4) a creative metropolis; and 5) a well-functioning metropolis. Shanghai
also wishes itself to review and fine-tune its long term development strategy of becoming
a global metropolitan region in light of these changes. Clearly, these five global roles areintegrated, and that to become a truly global metropolis, each of these five roles needs tobe developed in tandem. There are a lot study in describing the characteristics of global
metropolis (Center for an Urban Future, 2005; Chreod, 2008; City of London, 2009;
Freire and Mario, 2003; Fujita and Tomoya, 2005; Greater London Authority, 2009;
Kennedy, Chris et a, 2009; Leman, 2005; Price Waterhouse Coopers, 2007; Taylor, 2005;
Yusuf and Kaoru, 2006). These literatures have provided rich knowledge and experienceon global metropolis. This study firstly presents Shanghai’s development strategy to 2020
– establishing five global centers; then analyzes some key issues facing Shanghai; andlast, this paper puts forward some policy recommendations.

2. Shanghai’s Vision to 2020
The reality requires Shanghai to become a how international hub, let us to describe
here. Shanghai has formed the economic core of the YDR. The vision to 2020 is for
closer cooperation with YDR governments to foster more integrated regional
development.

32.1 To become a global financial center
Shanghai is China’s principal financial center. During the past 30 years, Shanghai
has succeeded in establishing a strong financial sector characterized by large scalefinancial markets, clustering of financial institutions, and agglomeration of skilled talents.
Institutions such as Shanghai Stock Exchange, Shanghai Futures Exchange, and Shanghai
Gold Exchange constitute the foundation on which Shanghai will pursue the role ofinternational financial center. Now, over 50% of fund companies and asset managementcompanies in China are based in Shanghai. Shanghai has attracted China Union Pay,
Foreign Exchange Trade system, and the Interbank Market. Shanghai also is China’s
leading city in attracting foreign financial institutions duo to its geographical superiority
and the best living and infrastructure conditions in China.
Aimed at building an international financial center, efforts will be made to improvefinancial institutions, financial markets, financial services and the financial regulatory
system in Shanghai. Pursuant to the principle of steady and prudent progress, Shanghai
will actively seek for effective solutions for comprehensive financial operations, upgrade
and integrate the local financial institutions, introduce and establish new type financial
institutions, and further bring together financial institutions with various circles oftalents. Proactive measures will be taken to promote the development of financial
derivatives, insurance and reinsurance, off-shore finance, and bonds and other emerging
businesses, to push forward the construction of a financial product innovation center, andto support and improve the development of capital, currency, foreign exchange, futures,gold and equity markets. The construction of financial market infrastructure including
trusteeship, transaction, clearance and settlement will be strengthened in order to promoteinterconnections and interaction between different financial markets. The shareholding
structure reform to merge tradable and non-tradable shares will be completed and thequality of listed companies will be improved. More efforts will be made to enhance thecredit reporting system, improve financial risk prevention and treatment, and continue tobuild up a financial security zone.
Shanghai may set out the following objectives to support this goal: become aninternational financial center by 2020 in equity market with the largest trading volume in
Asia; become an international financial center by 2020 in the foreign exchange market
with the largest trading volume in Asia; become an international financial center by 2020
in project financing with the largest number of project financings in Asia; become an
4

international financial center by 2020 in the bond issuance market; become aninternational financial center by 2020 in the futures market.
2.2 To become a global center for trade and logistics
The Yangtze Delta has clearly become China’s most important region for the handlingof both imports and exports. From handling 18.6% of imports and exports in 1995, theYDR now accounts for 37.2% of the value of China’s international trade. The reasons forthis huge increase in trade volume are principally: 1) the higher value-added
manufacturing that has developed in the YDR over the last twenty years; 2) the opening
up of central and western regions along the Yangtze River; and 3) improved transport
connections along the Yangtze River Basin that facilitate the movement of goods to andfrom the principal ports of Shanghai and Ningbo.
The rapid growth of the YDR as China’s trade hub could not have occurred without
massive investments in world-class transport infrastructure. The development of theYanshan Port and improvements to Waigaoqiao Port in Shanghai, and to deepwater ports
in Ningbo, have enabled the YDR to accommodate a huge increase in container traffic.
This extended accessibility has considerably widened locational choices for industries in
the YDR, enabling both domestic and foreign firms to benefit from larger industrial sites
at far lower land costs.
In concert with the development of container ports, massive investments were madein expressways across the YDR. Over 2,300 kms of expressways were constructed in the
YDR between 1990 and 2010. These expressway investments considerably improved
accessibility of the YDR to new and expanded container ports at Waigaoqiao, Yanshan,
and Ningbo. The new port at Yangshan, accessed from Luchaogang, covers all of
Shanghai within a two-hour drive-time, and extends as far west as Jiaxing in Zhejiang
Province.
Based on the campaign to build an international shipping center together with its
facilities such as the deepwater port, airports, railway and road networks, Shanghai will
strengthen the development of international transshipment logistics, and extend theshipping service industry chain. Efforts will be made to foster a modern logistics service
market, and build up a modern logistics system that integrates port, manufacturing, andurban delivery logistics. The service functionalities of logistics bases in the city, such as
the Deepwater Port, Waigaoqiao, Pudong International Airport, and the Northwest

5

comprehensive logistics park, will be improved, and measures will be taken to further the
standardizationoflogistics

technology

and

the

applicationoflogistics

informationalization.
Shanghai may set out the following objectives to support this goal: YDR will become
China’s principal trade hub, YDR's logistics infrastructure to be capable of handling 40%
of China's trade by 2020; Shanghai's role in global logistics will be as East Asia's
principal logistics node in the global supply chain; Shanghai to be major logistics hub tosupport YDR export processing for inter-regional trade between NE and SE Asia.
2.3 To become a global center for innovation-based manufacturing
Since the 1950s, Shanghai has been the most developed city in China from theperspective of manufacturing product. In the early 1990’s, Shanghai economy
experienced rapid growth because the opening-up and development of Pudong New
District attracted large amounts of foreign capital. To sustain this growth, policy
innovation is vital. Since the factor price in Shanghai will remain high and perhaps
higher, future growth will depend on an economic transition to innovation-based
manufacturing and services. Thus, innovation behavior, in both technical and managerial
areas, will be the economic growth power in Shanghai. The proportion of industry to
GDP in 2010 is 43%, decreased sharply from 55% in 2001. We project that the ratio of
manufacturing product, comprising most of the industry product, will continue to steadily
decline to around 30% in 2020. To maintain employment levels and purchasing power,
Shanghai must continue to have a highly productive manufacturing sector.
With improving the capacity for independent innovation as a core goal, efforts will
be made to develop large-scale industries, undertake large projects and build large baseson the one hand, and adopt new technologies, new facilities and new processes on theother hand, in order to upgrade the manufacturing sector, promote the formation ofindustrial clusters, and bring about a strategic shift from adjustment in the course ofdevelopment to upgrading amid development. To be specific, Shanghai will: makeintense efforts to upgrade the core competitiveness of the automotive and equipment
manufacturing sectors. Take proactive measures to develop the strategic sectors ofbio-medicine, new energies, new materials, shipbuilding, aviation and aerospace. For the
bio-technology and medicine sectors, efforts will be made to accelerate the application of
bio-technology in agriculture, environmental protection, energy and materials
development. In the new energy and new materials sector, efforts will focus on
6

surmounting main obstacles in the development of photovoltaic industry and wind power
facilities and materials, promoting the development of hydrogen energy, and developing
semiconductor lighting materials, energy-efficient construction materials. For the
shipbuilding sector, particular efforts will be made to overcome the technologicalbottlenecks in building LNG vessels and offshore floating oil storage facilities. For theaviation and aerospace sector, strong efforts will be made to push forward thedevelopment of new regional aircrafts.
Shanghai may set out the following objectives to support this goal: develop
globally-important capacities in innovation-based industry in equipment manufacturing
and advanced materials; become Asia’s principal center for scientific and technologicalinnovation and marketization; localize manufacturing of imported high value added andtechnology-intensive components; relocate most production in medium- and high value
added manufacturing to other centers in the YDR, leaving R+D and services as principal
focus in Shanghai.
2.4 To become a global center for creativity and culture
The past thirty years (1980-2010) saw rapid evolution of Shanghai into an artistic andcultural creativity hub, a promising development path in the regional specialization
process. The fast development of Shanghai as a creative hub extends the possibility of
the city to upgrade its cultural infrastructure, to shift from the old model of economic
growth and to reshape the urban functions in wider geographic space. This successdepends largely on the mass of creative people who agglomerate in the metropolis, andon environments which foster the creativity. Main environmental variables include new
media technology infrastructure and applications, accumulation of private wealth, andpublic recognition and respect for cultural and artistic works.
Shanghai has some advantageous conditions to become a global center for creativity
and culture such as: geographically surrounded by a wealthy YDR; traditional recognitionof “culture of Shanghai” in the YDR; spillover effect of Expo 2010; substantial real
economy of YDR to support creativity specialization; shift of economic growth model inShanghai;culturaldiversityandtolerance;

infrastructure;

financingfacility;

agglomeration of creative talents; and, emergence of creative precincts as creativity
organization model.
Efforts will be made to build a relatively comprehensive and refined cultural
7

industry and market system, promote integrated development of the technological,
creative and cultural sectors, intensify the program of opening up and innovation, andespecially promote the development of culture, leisure and entertainment, creative
business and fashion, printing and packaging, and other related businesses. Taking
network-based cartoon, film, television and the mass media as key entry points, Shanghai
will build a number of digital cultural content industry bases and parks with distinctive
features, and stimulate the emergence of cultural functional zones and core industrial
bases.
Shanghai may set out the following objectives to support this goal: Shanghai to
become Asia’s principal center for the performing and visual arts and culture, competingwith Tokyo and Seoul; Shanghai to become Asia’s principal center for design with afocus on architecture and engineering, interactive media, and exhibition design, based on
currently competitive segments; Shanghai to become China’s principal center forindustrial design, advertising, fashion design; Shanghai to extend beyond YDR to become
one of China's principal centers for literature, publishing, TV, film, music.
2.5 To become a well-functioning metropolis
Global research has found that economic benefits can be generated inagglomerations with large populations. The population of Shanghai municipality reaches
almost 20 million in 2010, 24.5 million in 2025, and 27 million by 2030 (Chreod, 2008).
In terms of economic growth, Price Waterhouse Coopers (PWC) conducted a study in2007 that projects the size of the economies of the world’s largest metropolitan regions to2020 (PWC, 2007).

In 2005, Shanghai is ranked 32nd in the world in terms of the size ofits metropolitan economy.

By 2020, Shanghai’s rank improves to 16th. When comparing

cities globally at the scale of metropolitan regions, Shanghai is the fourth largest in
population size in 2010, and will likely slightly overtake Mumbai to become third largest
by 2020 (Chreod, 2008).
Expo 2010 in Shanghai is successful, including major expansion of the subway
network and airport, construction of a new raw water supply intake on the Yangtze River,and the complete redevelopment of large areas along the Huangpu Riverfront.

These‘hard’ initiatives will have a significant impact on the quality of life of Shanghai’s
residents. Wanting to become a well-functioning metropolitan, Shanghai must continue
to require: comprehensive and balanced planning; the mobilization and application of8huge capital and recurrent investments; major upgrading of institutional capacities instrategic planning, monitoring, control, and coordination; and sustained cooperation
among municipal and district governments.
Shanghai may set out the following objectives to support this goal: achieve balanced
growth across the metropolitan region by 2020; infrastructure services across themetropolitan region will be on par with major cities in East Asia; environmental quality
across the metropolitan region is equal to major cities in East Asia; metropolitan
management conducted to highest standards in East Asia.

3. Key issues facing Shanghai
There are many problems and difficult with Shanghai’s aspiration to become a
global center. Here, we analyze some key issues as follows.
3.1 Key issues for a global financial centerWith its rapid economic emergence, Asia has the potential to accommodate a global
financial center comparable to London or New York. However, the competition is fierce
between several candidates: Tokyo, Hong Kong, Singapore, Sydney and Seoul. All thesefinancial centers need to break through beyond their current capability to fulfill theambition of global financial center. For shanghai, the main problems are as follows.
(1) Weak regulatory power in Shanghai. The Chinese main financial regulatory
bodies are all based in Beijing. This has at least two negative influences on Shanghai’s
ambitions: the distance between regulations and operations creates a gap between policy
and the real world, and many institutions have set up branches in Beijing instead of
Shanghai for access to regulators.
(2) Skilled people. Domestically, Shanghai has many more financial professionals
and talents than any other cities in China. However, compared with London，New York,or Tokyo, it lacks many advanced skilled and professional people.
(3) Unclear role of local regulatory and administrative bodies. Functions of local
government and local offices of regulatory bodies are not clear, which is confusing forforeign institutions.
(4) Regulatory Environment. Shanghai is inactive in financial innovation due to very
restrictive regulation.
9(5) Taxation. Shanghai is unable to compete with some offshore financial centerssuch as Hong Kong and Singapore in taxation, because taxes are set by the central
government.
(6) Decision making. Shanghai is not qualified to be an international financial center
based on RMB. If these major establishments are not relocated to Shanghai, the decision
making center will always be in Beijing.
3.2 Key issues for a global trade and logistics centre
To become a global trade and logistics centre, Shanghai and the YDR need to reachlevels in developed economies of 5-10% of GDP. While there is little doubt that thevolumes of trade with and through the YDR will continue to grow in global terms,
without improvements to the three components of logistics – transportation, inventory
storage, and logistics management – growing volumes will increase bottlenecks, increase
costs to producers, and erode the global competitiveness of the region as a whole. The
key issues for Shanghai becoming a global trade and logistics centre are as follows.
(1) The current structure of the logistics industry in Shanghai precludes economies
of scale and scope, especially for domestic providers. Logistics – especially by third
parties – is a relatively new business sector in the YDR. Large, state-owned corporations
and foreign MNCs (with state-of-the-art technologies and management systems) control
the third parties logistics market in the Delta. Small and medium size enterprises, largely
domestically owned, operate only in specific parts of the logistics supply chain. They
generally have limited knowledge of state-of-the-art technologies and management
systems, and of specialized characteristics of regional and global market demands.
(2) There is weak domestic capacity in post-industrial logistics compared to foreign
providers. The disaggregrated structure of the domestic supply market, and the attendantdiseconomies in scale, limit the scope of services that providers can offer. Even
Shanghai’s large domestic providers have very limited understanding of advanced,
post-industrial logistics services.
(3) Strategic planning of logistics infrastructure in the YDR generally
under-estimates market demands. Major transport infrastructure – ports, airports,
railways, and expressways – takes several years to plan, design, and build, making
demand assessments critical. A major difficulty for planners is lack of information on theorigins, destinations, and characteristics of transport movements in the YDR.
10

(4) Insufficient information on origin, destination, and types of goods movement in
the YDR. Insufficient coordination in planning of regional logistics infrastructure iscompounded by competition between municipalities and the underlying governancestructure of ‘self sufficiency’ at the city level . The situation is leading to misallocatedinvestment and system inefficiencies that carry long-term economic costs.
(5) Insufficient regional coordination in planning and provision of logistics services
leading to inefficiencies and resulting higher costs to firms. Foreign firms exhibit higher
cost-efficiencies and service effectiveness than their domestic counterparts, which
increases competitive pressures on local firms.
(6) Administrative interference and business culture of State-owned firms constrains
independent and market-responsive management. Foreign firms have a strong
competitive advantage in their access to international networks of key players in global
supply chains. Domestic firms, including large State-owned companies, are not yet partof these global networks and consequently cannot offer the range of services of theirforeign competitors.
3.3 Key issues for an innovation-based manufacturing center
To become a global innovative manufacturing center, Shanghai needs to exhibit two
key characteristics: balanced industrial development and developing with the YDR. In
2008, the tertiary sector accounted for 60% of GDP, the proportion of industry to GDP
decreased to 38%. The endowments of Shanghai include geographical advantage, which
could support future economic growth in Shanghai. In other words, Shanghai needs tocooperate cohesively with other parts of YDR for industrial structure transition. Thistransition includes not only the transfer of industries and service outsourcing but also
industrial integration through corporate merger and acquisition or business cooperationand connection, in a bid for higher competitiveness. The key issues for Shanghai
becoming an innovation-based manufacturing center are as follows:(1) Enhance innovation capability. For developing countries, process innovations are
required among almost all of the sectors, while scientific & technical innovations shouldbe pursued for some strategic purposes, such as new energy, nano technology, life
sciences and etc. In Shanghai up to 2020, the emphasis should be on process innovations.
Shanghai has promoted the expansion of IT application and its acceleration function inindustrialization. Process innovation should be the basic motivation in manufacturing
innovation. To encourage this kind of innovation in companies, especially those in
11

components production sectors, to give greater emphasis on process innovations is amajor challenge. Scientific & technical innovation is supported by large-scale capital
input with long-term investment cycles. Thus, large-scale enterprises should take the leadof this kind of innovation, and effective preferential policies by government arenecessary. There are many high level research institutes and large-scale backbone
enterprises in Shanghai. Between them, a steady cooperative relationship will be very
helpful to innovation. But how to set up the cooperative mechanism needs further
consideration.
(2) Issues for complex intermediate goods (parts & components) manufacturing. The
excess of exports over imports appears significantly in China’s technology intensive
manufacturing. However, this result does not mean China has core competence in theseareas. The export surplus results from the remarkable import surplus in R&D intensive
intermediate goods (including middle level technology goods). This shows that China’s
manufacturing sector still is low added value with only basic technology, whose added
value and technical level is even lower than intermediate goods with middle leveltechnology, in the international industry chains. Shanghai should support main areas for
R&D according to the characteristics of the key links (materials, production engineeringand processing quality) for intermediate goods production.
(3) Regional industrial integration. Through international investment andout-sourcing for non-core business, multinational corporations integrate global resources
based on global production networks to increase their competitiveness. In the next ten
years, key manufacturing companies should place emphasis on R&D activities, which arevital to support an industrial structure with focus on equipment manufacturing inShanghai. Several concerns should be taken into consideration as follows during the
integration: 1) enterprise development strategy is needed to create the core competence indifferent stages. 2) the essential competence can be measured by the brand, thus, brandbuilding needs attention throughout the long-term strategy.
3.4 Key issues for a creative metropolis
To be a hub of cultural creativity, Shanghai needs to exhibit several key
characteristics: clustering of creative people and creative communities; information andcommunication technology infrastructure; accumulation of wealth and emergence of
middle class; strong cultural industries and cultural undertakings; and culturalenvironment of tolerance and diversity; Brand of “created in Shanghai”. The key issues

12for Shanghai becoming a creative metropolis are as follows:(1) Protection of IP. IP protection in China is not satisfactory; this problem will not
be resolved in the near future or only locally in Shanghai. It represents a real dilemma for
China.
(2) Educational and training system. The current education system is restrictive on
creative motivation and capability, and precludes divergent thinking. Education reform
will be a very long term project.
(3) Cultural regulations. The lack of consistency in regulating cultural production
and the opaque mechanism of cultural supervision will surely constrain creative
motivation, and make the creativity environment repressive.
(4) Industrial policies at the cost of competition environment of SMEs. Shanghai
traditionally favors State-owned enterprises or multinationals due to their contribution to
local GDP.

The related business policies will harm the competition environment ofcreative enterprises, which are principally SMEs. These enterprises are the most vigorousin creative market, and they need fair and transparent environment.
(5) Branding of the city. The cultural positioning of Shanghai metropolis is fuzzy,and the effort of branding is not up to the international standard.
3.5 Key issues for a well functioning metropolis
Despite Shanghai’s large and growing population and economy – it is still notachieving all the benefits of agglomeration inherent to its size. For human, social, andeconomic development to occur sustainably in metropolitan regions, urban and suburban
areas need to function with most of the following key characteristics: Land; Transport;
Housing and real estate; Environmental quality; Infrastructure; Safety; Public services;
Culture and recreation; Metropolitan management. According to these characteristics, thekey issues for Shanghai becoming a well functioning metropolis are as follows:(1) Pattern of metropolitan growth is leading to agglomeration diseconomies that
could constrain Shanghai’s economic development. Shanghai’s spatial structure ischaracterized by very high densities that are extremely concentrated.

The metropolitan

core is by far the most dominant center in the region – Shanghai has a comparatively
small outer core, and proportionately small suburban satellite towns at far lower
densities. If recent urban development trends continue, densities in Shanghai will still bevery high in the metropolitan core.
13

(2) Inappropriate spatial structure for a rapidly-growing post industrial metropolitan
region. Shanghai’s unbalanced pattern of development is exacerbated by a disconnect
between land development and the provision of infrastructure, especially transport
networks and services. Traditional urban planning and transport planning approaches
followed by Shanghai Municipal Government (SMG) are becoming ineffectual.
(3) Insufficient integration of land use planning, land development, transportation
planning, and transport services. SMG is planning huge investments to 2020 in extending
the public rail transit network into suburban areas. However, the lines are designed tofurther reinforce scattered suburban development. Analysing the commuter rail plan withthe projected distribution of Shanghai’s population shows that, by 2020, only half ofShanghai’s residents will be served, and only 24% of suburban residents will have accessto commuter rail that would fully integrate them into the metropolitan economy,
especially its labour market.
(4) Insufficient provision of public transport services in suburban areas. Shanghai’s
housing costs are a major concern to its residents. Office and industrial rents are also
considerably higher than in most other cities in China; this affects the city’scompetitiveness in attracting knowledge-based services firms and innovation-based
manufacturers.
(5) Insufficient supply of built facilities meeting market standards. Shanghai’sefforts to clean up its water systems over the last 20 years have been formidable and are a
global model of commitment to environmental improvement. But – despite these efforts
and huge investments – water quality is not being improved obviously. 30% of the city’surban water supply will continue to be served by the Daqiao intake along the Huangpu,
and most suburban areas will continue to rely on self-supply through extraction of
surface and groundwater. Water quality along the Huangpu has been steadily
deteriorating for more than a decade.
Besides, there exist major problems such as: increasing untreated discharges ofpollutants upstream from Jiangsu and Zhejiang Provinces; continuing untreateddischarges and runoffs from suburban areas of Shanghai; metropolitan-wide functional
responsibilities and revenue and expenditure assignments not fully resolved or codified,insufficient cross-border coordination of urban development and infrastructure services,
environmental protection, and so on.

14

4．Strategic Recommendations
Wanting to become a global metropolis, Shanghai is facing many strategic obstacles.
Shanghai should consider and make strategic policy to eliminate these obstacles andunfavorable

factors.

Based

on

above

analysis,

weproposesomestrategic

recommendations as follows in order to achieve these goals and objective.
4.1 Recommendations for a global financial center
We propose the following recommendations for Shanghai becoming a global
financial center: 1) promote finance innovation; 2) cultivate a transparent and fair legal
environment; 3) create proper environment for direct financing development; 4) attract
city commercial banks’ headquarters; 5) establish a free environment for intellectuals.
4.2 Recommendations for a global trade and logistics centre
We propose the following recommendations for Shanghai becoming a global tradeand logistics center: 1) organize, prepare, and implement a YDR Freight Logistics Action
Plan to the highest international standard; 2) convene a Trade and Logistics Advisory
Group comprised of domestic and foreign logistics experts to advise on the preparation of
the YDR Freight Logistics Action Plan; 3) conduct a thorough regulatory review in the
trade and logistics sector; (4) strengthen Freight Transport and Logistics Business
Associations; 5) design and implement a Logistics Human Resources Development
Program.
4.3 Recommendations for an innovation-based manufacturing center
We propose the following recommendations for Shanghai becoming an
innovation-based manufacturing center: 1) establish a more efficient innovation incentive
system; 2) promote the innovative culture and social atmosphere, focusing andadvocating “Communication and Cooperation”; 3) form an efficient “Industry-Academia
Research” system.
4.4 Recommendations for a global center for creativity and culture
We propose the following recommendations for Shanghai becoming a global
creative and culture center: 1) establish coordination mechanism within municipal
government; 2) brand the city; 3) further separate cultural industries and undertakings; 4)provide support to creative infrastructure
4.5 Recommendations for a well functioning metropolis
We propose the following recommendations for Shanghai becoming a wellfunctioning metropolis: 1) prepare and implement a comprehensive metropolitan
15

development strategy to 2030 to highest international standards; 2) prepare andimplement a Metropolitan Management Action Plan; 3) prepare and implement a
YDR-wide Climate Change Adaptation Plan.

5. Conclusion
China is the second largest country in GDP today, but still has no any a global
metropolis. The development trend of Chinese economy needs to have a global
metropolis on its own internal. Shanghai is a best candidate city in China. Shanghai has
many favorable conditions and factors, however, also has many unfavorable conditions
and factors for becoming a global metropolis. This study puts forward Shanghai’sdevelopment direction to 2020. Shanghai want to become a global metropolis, shouldhave five global functions as: 1) global financial center; 2) global trade and logistics
center; 3) global center for innovation-based manufacturing; 4) a creative metropolis;
and 5) a well-functioning metropolis.
This study also definitely set out Shanghai’s development objectives to support
these five goals to 2020, and analyzes some unfavorable conditions and factors which
obstacle Shanghai’s development. At last, this study puts forward some policy
recommendations in order to eliminate these unfavorable conditions and factors. The
recommendations made in this study are the actions that we believe should be
implemented for Shanghai to become a global metropolitan region by 2020. The maincontents of recommendations include: promote finance innovation; organize, prepare,and implement a YDR Freight Logistics Action Plan to the highest international standard;establish a more efficient innovation incentive system; establish coordination mechanism
within municipal government in the YDR; and, prepare and implement a Metropolitan
Management Action Plan, and so on.
Implementation of these recommendations will require a strong willingness toinnovate, test, evaluate critically, and learn. Shanghai has demonstrated over the lasttwenty years such willingness in many ways, especially in industry and infrastructure.
To become a global metropolitan region, Shanghai must extend that willingness to
wide-ranging institutional, organizational, and procedural reforms.

16

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