Academic journal article Journal of International and Global Studies

Globalization and Shanghai Model: A Retrospective and Prospective Analysis

Academic journal article Journal of International and Global Studies

Globalization and Shanghai Model: A Retrospective and Prospective Analysis

Article excerpt


Economic globalization has been a hot topic among scholars since the 1980s. Debates have never stopped over the advantages and disadvantages of economic globalization for the world, particularly for the developing countries. Some scholars look at globalization with skepticism and criticize economic globalization for causing serious problems such as the north-south conflict, the gap between rich and poor, and environmental deterioration, thus triggering the global economic crises. In the meantime, other scholars look upon globalization favorably and see a more diverse and better life for all resulting from economic globalization. They believed that economic globalization has accelerated free market flows and enabled the optimal distribution of productive elements in the world and thus promoted the growth of world productivity and provided more opportunities for the developing countries, which have greatly benefited from foreign capital and international market. (1) As China's most globalized city, Shanghai has demonstrated all the benefits and problems resulted from (or connected to) its economic globalization. The history of Shanghai's economic change over the past 170 years may shed light on the debate regarding whether economic globalization has been more harmful or more beneficial to the world and will be certainly helpful for our understanding the influences of globalization upon China as well as upon the world.

Globalization, de-globalization and re-globalization of Shanghai's economy

While some scholars believe globalization is a phenomenon with a long history, most scholars put the nineteenth century as the advent of globalization, (2) when national economies across the world became increasingly interdependent through a rapid increase in cross-border movement of goods, services, technology and capital (Joshi, 2009). Shanghai's economic globalization also started in the middle of 19th century, when the Western countries forcefully drew Shanghai into the world market after the First Opium War. (3)

Unlike many of China's well-known cities, Shanghai's history as a metropolitan city is short, and, until 1843, it was still not an independent city. The surging demand for tea, silk, and other Chinese products in the western countries in the 19th century provided a great historical opportunity for Shanghai's globalization. With the rich and vast hinterlands of the Yangtze River Valley, Shanghai quickly emerged as a booming international trading port. Engagement into the global economy triggered Shanghai's geographical advantages as a port city, which greatly strengthened its import and export function. Very soon, Shanghai replaced Guangzhou as China's largest treaty port for foreign trade. By the 1870s, over 60 percent of China's foreign trade was handled through Shanghai (Luo, 1932, p. 90). By the 1920s, Shanghai had become one of the 14 largest trade ports in the world. The imports and exports of Shanghai made up more than 50% of China's total foreign trade before 1949 (Zhang, 1991, pp. 87-88; Cheng, 1956, p. 23).

Stimulated by the expansion of international trade, Shanghai's modern industry prospered. Thanks to the globalization of Shanghai's economy, a large number of modern factories appeared in Shanghai. With the advanced technology and equipment and systematic management, these new enterprises transformed Shanghai into China's modern industry center. By the early 1930s, about half of China's modern manufacturing companies (1,200 out 2,435) were located in Shanghai. These factories employed 43% of China's industrial workers and manufactured 51% of China's total industrial products. Shanghai's modern factories produced about 60% of China's cigarettes from 1925 to 1935 and generated 58% of China's electric power in 1936 at the lowest price in the world (Liu, 1940, pp. 26; Murphey, 1953, pp. 196, 197, 200).

The economic boom and population growth yielded new demands. …

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