[Big read] Shanghai’s Lin-gang struggles to become the ‘new Pudong’

Four years ago, engineer Liu Fei (pseudonym) baffled his friends when he made the decision to buy a house in Lin-gang, the easternmost part of Shanghai.

Liu told Lianhe Zaobao that at that time, many people felt that Lin-gang was too far from Shanghai city centre, too windy by the sea and had little living amenities, making it an unsuitable place to call home. However, it became a Special Area of ​​the Shanghai Free Trade Zone in 2019 and later a base for electric vehicle giant Tesla’s factory. These made Liu optimistic about the prospects of this city.

In addition, housing prices in Lin-gang were about 30,000 RMB (US$4,125) per square metre at that time, 60% lower than that in Sanlin, Pudong, where Liu lived. Hence, Liu and his wife decided to buy a house in Lin-gang and became the first batch of property owners after it was designated as a Special Area.

Since then, Liu has kept abreast of the city’s developments. He is pleased that in the five years since, Lin-gang’s industrial output has grown as rapidly as expected, and more buildings have been built; all these changes are “evident”.

With a development area of ​​about 873 square kilometres, Lin-gang became a new Special Area of ​​the China (Shanghai) Pilot Free Trade Zone in 2019. The strategy is a brainchild of President Xi Jinping who is also involved in its deployment and promotion. The aim is to create a special economic functional zone that is internationally competitive and a modern new city.

Official data show that between 2019 and 2023, Lin-gang’s average annual GDP growth reached 19.8%. Even in 2022, when Shanghai was hardest hit by the Covid-19 pandemic, Lin-gang’s GDP still grew by 21.2% year-on-year.

Based on the Lin-gang Special Area Innovative Industries Plan (《临港新片区创新型产业规划》) published in 2020, the aim is for Lin-gang’s GDP to reach 1 trillion RMB by 2035. The Pudong New Area established in 1992 did not achieve a GDP in excess of 1 trillion RMB until 2018. Lin-gang aims to achieve within 16 years what Pudong did in 26 years and “become a new Pudong”.

Unlike its eye-catching economic figures, Lin-gang’s population growth is particularly slow. The official plan is for the local permanent population to reach 800,000 by 2025, but the Pudong New Area Statistical Yearbook (浦东新区统计年鉴) shows that by the end of 2022, the total permanent population in Lin-gang’s four towns just exceeded 450,000, with an average annual increase of 46,000 people between 2020 and 2022.

To achieve the official target, Lin-gang needs an average net inflow of 116,000 people annually between 2023 and 2025. Even then, its population still has to increase by 170,000 people per year over the subsequent ten years to reach the goal of 2.5 million inhabitants by 2035.

One of the main reasons that prevents people from settling in Lin-gang is that it is 75 kilometres away from the Shanghai city centre. So, it takes at least an hour and a half by car or metro to get from Lujiazui in Pudong to Dishui Lake (Dishui Hu) in Lin-gang. In contrast, it takes less than half an hour by high-speed rail to get from Shanghai to Suzhou, and only an hour from Shanghai to Hangzhou.

In the last nine years, Liu Anhong (pseudonym), who lives in Lin-gang’s Wanxiang town, spends at least four hours on his commute every day. He rises at 6.40am, boards a bus for the metro station at 7am, and makes two metro lines transfers before reaching his office in Yangpu by 9am.

Liu, who is from Shandong, decided to buy a house in Shanghai in 2015. He found Lin-gang the most cost-effective after comparing it with several locations. He explained, “Property prices here are cheap, so it’s suitable for non-local families with housing needs. The area also has great development potential. Metro Line 16 also connects it to the city centre, making it more convenient than other new suburban areas.”

Nine years on, Lin-gang has recreational facilities such as a planetarium, ski resort, performing arts centre and football sports centre, and more than a dozen new schools are set up each year. The only thing not up to Liu’s expectations is that it is still only connected to the city centre by one metro line.

A year after the Lin-gang Special Area was set up, the Covid-19 pandemic broke out. The pandemic-induced lockdown of Shanghai in 2022 hampered the planning and construction of several local transportation routes.

The Lianggang Express Line that links Lin-gang to the Pudong Airport was scheduled for completion in 2025, but based on the current progress, it would not be open until 2026 at the earliest. As for the Metro Line 27, which reportedly will allow Lin-gang commuters to “reach Lujiazui directly within half an hour”, tender for its planning phase was just awarded in 2023 and the start of construction is still pending.     

Liu believes that if Lin-gang can improve its external transportation links or provide more diverse job opportunities locally, it would be able to attract more settlers. He said that the area is currently dominated by advanced manufacturing and tech companies, but “there are more and better-paying opportunities in the city centres” for his line of work in e-commerce.

One can directly experience the drawing power the industries have on the population from a short trip to Lin-gang. In the Dishui Lake district where a number of administrative institutions and cultural tourism attractions are concentrated, many urban tourists thronged its planetarium and aquarium on weekends. However, few would check out its streets and alleys, so the shops there do not get much business.  

In Nicheng town, which is near Tesla’s Gigafactory and the SAIC Lin-gang manufacturing base, the streets are bustling with mostly young people on weekends. During lunchtime, it is difficult to find a seat to dine at the local Wanda Plaza, and numerous food delivery personnel can be seen picking up orders.   

Chen Bo, a Chinese economist and distinguished researcher at Liaoning University, told Lianhe Zaobao that the three pandemic years impeded Lin-gang’s construction progress and personnel inflow, thus slowing down the development of its service industry as well.

He explained, “The service industry is reliant on patrons, so it would not prosper with a small population. At the same time, a lagging service industry will not attract people to move in, posing a challenge for Lin-gang to integrate its industrial and urban development.”

Chen feels that Lin-gang should take advantage of its infrastructure and urban planning to focus on developing new service industries and make up for its shortcomings in physical service facilities.

He pointed out that while there are few pedestrians in the Dishui Lake area, office workers are aplenty, so there is a huge underlying demand for delivery and drive-through services.  

To attract more people, especially young talents, Lin-gang has launched more favourable moving-in and settling-down packages. For example, the residency requirement for eligible talents to apply for permanent residency will be shortened from seven to five or even three years. At the same time, diversified housing support such as designated apartments, settling-down subsidies and housing purchase subsidies will also be provided to talents working there.

Based on data provided by the Lin-gang Special Area management committee, as of May this year, more than 90,000 talents have moved to Lin-gang from other parts of China, and it now boasts more than 110,000 talents altogether.  

For Shu Yanzhao, who started working in Lin-gang 14 years ago, the place is now completely different from what it used to be.

He recalled that there was usually a single car on the roads in the Dishui Lake, and no one on the streets of Nicheng town. He continued, “Back then, most people who bought houses here were from other places in China, but now there are even foreign buyers, isn’t this rapid development?”

After settling down in Lin-gang for several years with his family of four, Shu left his job at a state-owned enterprise to start a cultural and creative company in the Dishui Lake district. He is optimistic that Lin-gang will become as prosperous as the Lujiazui financial district within a decade. He shared, “When Lujiazui was being built, nobody wanted to move there too. The ship to Lujiazui has sailed, but there is still time to board the one to Lin-gang.” 

Lower housing prices than in the city centre, superior education facilities to surrounding areas, brand new urban construction, and national policy support are some of the unique advantages that attract Shanghai immigrants to buy houses in Lin-gang. 

Based on the 14th Five Year Plan for the development of Lin-gang, it will add 200,000 new housing units of all types, with a total planned housing construction area of ​​16 million square metres by 2025. Official data show that Lin-gang has already added 114,900 new housing units with a total floor space of ​​11.05 million square metres. So, it can be said that Lin-gang’s housing supply has outpaced its population growth. 

However, the real estate crisis of the past two years has also affected Lin-gang as a number of unfinished buildings and inferior housing developments have emerged. Lin-gang’s remote location and relatively independent jurisdiction make it more difficult for homeowners to protect their rights, causing some to cancel their plans to ​​settle there.

In the Dishui Lake district at the heart of urban Lin-gang, unfinished buildings in various states can be seen. Within 500 metres of the metro station, the steel bars and concrete of the Yongquanyuan housing project are exposed. Just a street away is the Jiahe Meiyuan development. Even though its water and electricity supplies are both up, homebuyers there are also unable to move in. 

A Jiahe Meiyuan homeowner, Gao Zhudi (pseudonym), told Lianhe Zaobao that the development was supposed to be handed over to homebuyers in May 2019, but for five years the developer has come up with various reasons to delay it. Following the pandemic, the debt-laden developer was unable to pay 12 million RMB in fees for the land premium, maintenance fund and real estate certificate taxes and fees, thus preventing the final inspection required to complete the construction.

After Gao bought a Jiahe Meiyuan unit in 2018, she rented an interim place while waiting for her new home to be completed. She certainly did not expect the lengthy delay in obtaining her property certificate and the problems this caused to her hukou registration and her child’s school enrolment.

Gao made calls to the complaint hotline almost every day last year and also went to the public complaints office several times, but to no avail. She said, “This is unlike the Shanghai I know. In fact, it’s even worse than the county town where I am from.”

More than a hundred Jiahe Meiyuan homeowners are still negotiating a solution with the Lin-gang management committee and the developer. They hope that the government can fork out the monies owed first and recover it during the developer’s bankruptcy proceedings. However, Gao can no longer afford to wait as her child has reached schooling age, so she had no choice but to buy another house in a neighbouring town and leave Lin-gang.    

On the road from the Dishui Lake metro station to Jiahe Meiyuan, a huge billboard displays Lin-gang’s signature slogan: “A young city for young people.” Gao was once attracted to its promise, but now she only finds it ironic. She questioned, “How can young people settle here if they don’t have houses to live in and their children can’t attend school?”

Unlike other areas, the quality of Lin-gang houses is also affected by its strong coastal winds and humid air. Consequently, homeowners at the Jiuhai Yuntian residential development have lodged numerous complaints over building quality this year.  

Developed by China State Construction Engineering and located to the south of the Dishui Lake district, Jiuhai Yuntian is a residential area within Lin-gang’s World Laureates Community (WLC). With more than 3,000 housing units, it is one of the few mega housing developments in Lin-gang. The project was expected to be delivered by the end of this year, but property owners found paint bubbles on the exterior of many residential buildings at the start of the year and that large sections of wall paint have peeled off.  

One of the homeowners Lu Ying (pseudonym) told Lianhe Zaobao that upon discovering quality issues with the external walls, the owners have communicated many times with the developer, but they were not able to provide a solution that meets the homeowners’ expectations so far.

When I visited the residential development in June, I saw many blocks with patchy external walls and workers were busy repairing them. 

Other than problems with building quality, Lu has also been exhausted from protecting her rights. Her related posts on various social media platforms have been deleted one after the other. Her neighbours have also been forced to stop participating in such activities as their employment was being threatened.  

Lu, who works in scientific research, initially planned to apply for a job at the WLC international joint laboratories, but not anymore. She explained, “What happens in Lin-gang does not get out easily, as though it is isolated from the outside world. I already had to put up with so much grief from buying a house here, let alone work?” 

The Lin-gang Special Area, established against the backdrop of the escalating China-US trade war, not only aims to attract Chinese talents but also retain foreign companies.

Lin-gang’s 14th Five Year Plan made clear the city’s intention to benchmark itself against the most competitive free trade zones globally. It aims to produce pioneering and exemplary institutional innovations, offering experiences and models that other free trade zones can adopt and promote.

The Lin-gang state land overall plan that was published in 2020 proposed stepping up efforts to attract top scientists, cross-border trade personnel, transnational scientific research talents, and foreign high-tech entrepreneurs. It also laid down the goal for Lin-gang to have no less than a third of the total number of multinational company regional headquarters in Shanghai by 2035.

Official data show that the number of new foreign companies in Lin-gang grew from 1,205 in 2020 to 3,328 in 2023. It also accounted for a tenth of the newly established foreign enterprises in Shanghai last year.

Electric vehicle titan Tesla is the most famous among the foreign companies in Lin-gang. In May, the American company started construction on its second Gigafactory there. The new facility is expected to start producing energy storage products from the first quarter of 2025, creating tens of thousands of job opportunities in the area. 

According to the 2024 business confidence survey conducted by the European Union Chamber of Commerce in China, out of the 190 corporate members of its Shanghai Chapter that participated in the survey, only 6% are operating in Lin-gang. Its vice-president and Shanghai Chapter chair, Carlo D’Andrea, told Lianhe Zaobao that the majority of EU companies are still operating in the city centre of Jing’an and the Pudong New Area.  

He added, “It takes at least 1.5 hours to travel from central Shanghai to Lin-gang, making it difficult for our members who are meeting clients. Even though Lin-gang has a very nice planetarium and aquarium, it still does not have enough facilities to meet the daily needs of expatriates.”

To attract corporate settlers, the income tax for companies in key industries and high-end talents in short supply is capped at 15% in Lin-gang. However, the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, which was set up after Lin-gang, offers the same tax incentives, while the Hainan Free Trade Port offers zero import tariffs. 

D’Andrea believes that when compared with other new free trade zones, Lin-gang’s biggest advantage is that it is part of Shanghai. Citing the findings of his chamber’s 2024 business confidence survey, 63% of the respondents believe that Shanghai has an advantage for research and development (R&D) compared with other cities in China. Furthermore, they feel that Shanghai is also one of the best places for foreign businesses to operate in China as it is the most international Chinese city.  

D’Andrea also noticed that in certain areas, Lin-gang is more flexible in providing case-to-case solutions, for example on cross-border data transfer that foreign companies are interested in. He said, “This is very important for members to carry on business and R&D.”

In April, the Lin-gang cross-border data transfer service centre started operations. In May, its management committee issued the first general data list of cross-border data, which covers 11 data application scenarios including intelligent cars, mutual funds and biomedicine sectors.

Liaoning University’s Chen Bo highlighted that the current international situation means that Lin-gang faces greater uncertainty in attracting foreign investments. However, the biggest advantage of the new free trade zone is still its outward-oriented development model. He explained, “So long as Lin-gang continues to work on its opening up, it will gradually recover its ability to attract foreign investments.”

D’Andrea hopes to see bolder and more comprehensive reforms in Lin-gang. He said that as geopolitical tensions rise and the business environment in China becomes more complex for foreign companies, “You have to try new things to attract more businesses and bring back confidence”.

This article was first published in Lianhe Zaobao as “上海临港不够旺招贤纳士聚人气”.

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