A\r\n view of the Bund and the Lujiazui financial area in Shanghai from the \r\nroof of the CITIC Plaza on Jan 1, 2021. [Photo by Fang Zhonglin/for \r\nChina Daily]

Cosmopolitan metropolis plays significant role in CPC's national development plans

Walking past posh restaurants and fancy boutique stores in Xintiandi,\r\n one of Shanghai's most fashionable lifestyle hubs, one would eventually\r\n come across a red and gray-bricked two-story house.

While this building looks no different from rustic shikumen \r\nresidences that were once commonplace a century ago, it is in fact a \r\nsignificant part of China's history－this venue was where the Communist \r\nParty of China was born following a meeting that began here in 1921.

There are many reasons why Shanghai became the birthplace of the CPC,\r\n but one of the main reasons is the city's openness. After all, Shanghai\r\n was one of China's first trade ports, and this fueled its \r\ntransformation into a global hub.

Over a century since it became a treaty port, Shanghai's openness is \r\nstill its most definitive trait, and it is why this cosmopolitan \r\nmegacity plays a crucial role in espousing the Party line and bolstering\r\n the national blueprint for development.

"Since the founding of the People's Republic of China, Shanghai's \r\nfast development has been attributed to its implementation of China's \r\nnational strategies, including the establishment of the Pudong New Area \r\nin the 1990s and the integration of the Yangtze River Delta in recent \r\nyears," noted Zhao Gangyin, director of the Research Department of Party\r\n history at the Shanghai Administration Institute.

The reason Shanghai was chosen to execute important national \r\nstrategies, added Zhao, lies in the nature of the city, which President \r\nXi Jinping once summarized using three words－openness, innovation and \r\ninclusiveness.

"Every city has its character. Located where the Yangtze River flows \r\ninto the Pacific Ocean, Shanghai has been a pioneer of opening-up in \r\nChina," Xi said in his speech at the opening of the inaugural China \r\nInternational Import Expo in 2018.

"The city's development is made possible by its character, \r\ncompetitive edge and steps toward greater opening … indeed, openness, \r\ninnovation and inclusiveness have become the hallmark of Shanghai. These\r\n traits are also a vivid reflection of China in the new era and its \r\ncommitment to development and progress."

This openness has also served as a magnet for foreign multinationals looking to set up their regional headquarters.

Located just across the Party's Memorial House is the global flagship\r\n store of YSL Beauty, a brand under the L'Oreal Group, which recently \r\nselected Shanghai as its North Asia headquarters.

According to the company's North Asia president and China CEO Fabrice\r\n Megarbane, this move was made because Shanghai's open nature allows for\r\n "a much faster ecosystem to grasp the trends… faster in terms of the \r\ndecision-making and collaboration needed to capitalize on the 'beauty \r\ntriangle' formed by Shanghai, Seoul and Tokyo".

This reasoning is synonymous with the city's broader ambition to \r\nbecome a strategic node bridging domestic and international resources. \r\nIt's an ambition that is very much aligned with the dual-circulation \r\npattern proposed by the central government.

That pattern is among the highlights of the 14th Five-Year Plan \r\n(2021-25), the key document charting China's social and economic course \r\nfor the next five years.

"Shanghai will continue to improve its ability to participate in \r\nglobal trade, finance and technology matters while strengthening \r\ndomestic consumption, production and technological capabilities to hedge\r\n against global market disruptions," noted Huang Renwei, executive \r\ndeputy director of the Institute of Belt and Road& Global Governance\r\n at Fudan University in Shanghai.

While the new pattern reflects the nation's goal of shifting from an \r\nexport-and investment-centric economy to one that is driven by demand \r\nand innovation, the directive now carries more strategic weight given \r\nthe uncertainty in the global arena caused by the COVID-19 pandemic.

"Because the world has entered a period of turbulence and \r\ntransformation, Shanghai faces challenges from external changes and \r\nemerging opportunities stemming from new rules derived from new global \r\ngovernance patterns," Huang said.

The dual-circulation pattern refers to the two-pronged strategy of \r\nspurring domestic demand while catering to overseas markets. In terms of\r\n the former, Shanghai has been tasked with spearheading enhancements to \r\nthe Yangtze River Delta regional integration plan to unlock the true \r\npotential of industries including manufacturing, trade, artificial \r\nintelligence and finance.

The city is also aiming to maximize the potential of its suburban \r\nareas, having rolled out action plans to transform five existing outer \r\ndistricts into hubs for industries such as automobiles and science and \r\ntechnology.

"When we talk about opening-up, the importance of internal opening-up\r\n should not go unnoticed," said Shi Liangping, an economic researcher at\r\n the Shanghai Academy of Social Sciences. "Only by tearing down \r\nadministrative barriers, such as those between cities and provinces, can\r\n we unleash more room for growth."

In terms of catering to overseas markets, Shanghai should strengthen \r\nits role as a bridgehead for the Belt and Road Initiative by leveraging \r\nits free-trade zone and the annual China International Import Expo, Shi \r\nsaid.

One way to do so is to hinge on the headquarters economy. This \r\napproach, which is one of the five pillars of development that the \r\nmunicipal government is focusing on, would help persuade global \r\ncorporations to set up their regional headquarters in the city.

The other four pillars are innovation, service, openness and online traffic.

By the end of last year, Shanghai was home to 771 regional \r\nheadquarters of multinational corporations, among which 112 were Fortune\r\n Global 500 companies.

Despite these impressive numbers, there is still room for progress. \r\nTang Zilai, a professor of architecture and urban planning at Tongji \r\nUniversity in Shanghai, points out that there is still a gap between \r\nShanghai's status quo as a gateway city and its desired title as a true \r\nglobal hub.

"Only seven Fortune 500 corporations are headquartered in Shanghai," \r\nTang said. "While the city has in part managed to handle global \r\nresources, it isn't well prepared for conducting global resources \r\nallocation, and that's the direction Shanghai should be moving toward."

To accelerate its transformation into a global financial and \r\ntechnology center, the Shanghai government had in the municipal version \r\nof the 14th Five-Year Plan proposed speeding up the construction of the \r\nbond market, amplifying the influence of gold and crude oil futures \r\ntraded in Shanghai and implementing new pilots for matters like digital \r\ncurrency.

But it will ultimately be the service level and business environment \r\nthat foreign companies are most concerned about, said Mei Yan, senior \r\npartner and chairwoman of China's Brunswick Group operations. To make \r\nthese two aspects more attractive, the government should promote \r\nopening-up in new sectors, ensure fair and equitable competition and \r\nprovide legal protection for foreign companies, she noted.

The concept of "openness", however, should not be limited to the \r\ngovernment's approach of luring more international firms. According to \r\nTang, it is equally important to cultivate domestic enterprises and have\r\n them set up their headquarters in Shanghai.

"Domestic companies that manage to combine global resources and local\r\n expertise exemplify the dual circulation pattern that the central \r\ngovernment is calling for," Tang said.