Shanghai's millions race for wealth
By William Mellor
Bloomberg News Service
SHANGHAI, China — On a Sunday in April, British banker Ray Li climbed into a white Porsche 911 and sped off in pursuit of a trophy on the world's newest and most expensive Formula One raceway: the Shanghai International Circuit.
"If I could drive around this track as fast as Shanghai is growing, I'd be crowned champion this year for sure," says Li, 35, who heads an Asian consumer banking unit at Barclays Plc, the U.K.'s No. 3 bank. Li, who's based in Hong Kong, finished sixth that day in the 2005 Asia GT Challenge event.
From the $417 million racetrack to the monorail that whisks visitors at 268 miles per hour between the $3.6 billion Pudong Airport into the country's fastest-growing city, Shanghai is China on steroids.
One side effect: In the first quarter alone, real estate prices rocketed 19 percent, and any collapse might ripple through the nation's banking system, with its $188 billion of bad loans.
Another concern: the Shanghai Stock Exchange Composite Index's 50 percent plunge during the past four years, which has left many once-hopeful Chinese investors impoverished, disillusioned and restless.
Shanghai's economy accelerated at 13.6 percent last year, says Vice Mayor Zhou Yupeng, 57, sipping tea in the government headquarters that dominates Renmin (People's) Square. The increase outpaces the 9.5 percent rise in gross domestic product for China as a whole.
Shanghai's official population of 13.5 million has swelled by almost one-third to 17.4 million as the city's boom has lured 3.9 million migrants, mostly from rural areas, according to government statistics.
"China is going to be the biggest urbanization story anyone has seen in a long time," says Shu Yin Lee, 38, who helps manage $1 billion in Shanghai for Los Angeles-based Dalton Investments LLC. "Shanghai will feel the biggest effect of that drift."
This year, Zhou says, Shanghai's per-capita GDP will top $6,000, which would be six times the rate for the rest of China, according to data compiled by Bloomberg.
The figure will rise to $10,000 within five years, predicts Huang Yaocheng, deputy director general of the Shanghai World Expo Coordination Bureau, which is planning a six-month-long trade show for 2010 that he says will draw 200 nations and as many as 170 million visitors.
Many Shanghainese already surpass Huang's wealth projection. Handel Lee, who spent $80 million transforming a 90-year-old office building into Three on the Bund, a luxury retail complex that features an Armani store and an Evian spa, says his research shows that 800,000 residents — almost 5 percent of Shanghai's population — have either a net worth of $100,000 excluding their homes or an annual income of $75,000.
"And they're spending that wealth," says Lee, 43, a Washington-born lawyer whose tenants include Jean Georges, a haute-cuisine French restaurant run by New York-based restaurateur Jean-Georges Vongerichten.
At Jean Georges, dinner for two can easily cost $190 — equivalent to the average monthly wage.
