"Somebody up high passed the word to the banks to make sweetheart loan deals," a Western diplomat told me on my 1997 visit. "It makes for a kind of eerie skyline of vacant buildings."
The situation defines the term glut. Office building vacancy levels stand at 40 percent on the average and in some districts may be 70 percent, analysts say.
Office and apartment rents have tumbled 30 and 40 percent from levels a year previous that were among the highest in the world. Some analysts say prices will fall another 20 to 30 percent by early 1999 as new office space comes on line. Already a syndrome is seen of some firms moving from expensive locations to cheaper premises which were occupied only a year.
The over-building has just begun. The other day in Pudong I stood at the foot of the Japanese Mori building and couldn't see the top of it in the fog. When completed, it will be the world's tallest building, of course including a five-star hotel on the premises. Just down the street will be the world's second-tallest and fifth-tallest buildings and the largest shopping mall in Asia.
Chinese authorities--keep in mind that President Jiang Zemin and economic czar and Premier Zhu Rongji are from Shanghai--have proven themselves adroit at mobilizing OPM--"other people's money--for Shanghai's development. Overseas Chinese are in the forefront, not only in business investments but also in high-visibility cultural projects like the stunning new Shanghai museum.
Through September 1998, according to the Shanghai Municipal Statistics Bureau, Hong Kong leads in foreign business contracts with 6,960 projects totaling US$ 11 billion, Japan is next with 2,178 projects worth US$4 billion, the U.S. is third with 2,209 projects worth US$3 billion and Taiwan has 2,354 projects worth US$1.6 billion.
Japanese seem to be switching their emphasis from Beijing to Shanghai.
"Unlike the 1980s when most Japanese investors in Shanghai were small-sized businesses, many multinationals are now investing here," said Zhang Peiping, deputy director of the Shanghai Foreign Investment Commission.
He said that by end of la 1997 50 of the Fortune top 100 industrial giants had invested in Shanghai and among them were 11 Japanese firms. He mentioned Hitachi, Matsushita, Sony, Toshiba, Honda, Fujitsu, NEC and Sharp as leading names.
There are now more Japanese living in Shanghai (about 6,000) than in Beijing (about. 5,000). Americans in Shanghai number only about 2,000 compared to about 6,000 in Beijing, according to estimates from business and diplomatic sources.
If there is more outward sparkle in Shanghai than during my first visit in 1973 and on several others leading up to my last in 1989, there is also more intellectual ferment, to put it mildly.