Nightly Business Report . Video #10 - Shanghai Stock Trading

Video #10 - Shanghai Stock Trading

Monday, January 09, 2006

BACKGROUND INFORMATION

Shanghai (pop. 8,205,598) is the largest city in China and a center of industry, trade and finance. It is located 14 miles south of the area where the Huangpu and Yangtze rivers meet and empty into the East China Sea, making it China's leading port and industrial city.

Shanghai developed during the Song dynasty (960-1279) as a small trading town. In 1842, at the end of the "Opium War," the United Kingdom forced China to open the town to foreign trade. People from France, the United Kingdom, the United States and other nations settled in Shanghai and influenced its affairs. In these pre-Revolutionary glory days, Shanghai was Asia's financial center. But after the Communist takeover of China in 1949, the city became known as the source of the country's highest-quality industrial goods, its best cars, bicycles, and televisions. The revenue from this great concentration of industry helped bail China out of its misguided economic policies. Up to 80% of Shanghai's local revenues were forwarded to the central government; on a net basis, prior to 1980, Shanghai paid for one third of China's national expenditures.

When the provinces of Guangdong and Fujian opened up to the outside world in the 1980's, inviting a frenzy of investment, Shanghai stood still. "The central government did not dare to experiment with reforming Shanghai's economy," says Yuan Enzhen, head of the Economics Institute at the Shanghai Academy of Social Sciences. Failure would disrupt the vital flow of revenue. So Shanghai was starved for money to expand its clogged ports, re-equip an ancient telephone system, clear jammed roads, or build apartments. While much of China joined the world economy, Shanghai was stuck in a socialist time warp.

Since 1991, Shanghai has been transformed. Miles of new high-rise apartments stretch from the airport into town. Six-lane elevated highways snake through the city center and above huge swaths of razed houses. Bulldozers work round the clock, clearing land for highways and skyscrapers.

Foreign companies continue to pour money into manufacturing. General Motors built a $1.6 billion plant to assemble Buick Regals for the Chinese market. Intel opened a semiconductor plant, and electronics giant NEC of Japan committed to build a $1.3 billion factory. The Shanghai Stock Market raised 95.749 billion yuan (over 11.5 billion U.S. dollars) in 2001, up 4.08 percent over the previous year. By the last trading day of 2001, it had a total of 646 listed companies, which issued 690 billion shares worth some 2.76 trillion yuan (about 333 Billion U.S. dollars). By December 28, 2001, over 34.19 million investors had participated in A-and B-share trading in Shanghai-based stocks.

SOURCES:

"Shanghai Stock Market Collects 96 Billion Yuan in 2001, Xinhua News Agency, December 31, 2001. www.elibrary.com

Butler, Steven and Thomas Omestad, "China's exhibit No.1," U.S. News & World Report, Vol. 124, pp 38, June 29, 1998. www.elibrary.com

Wakeman, Frederic, Jr., "Shanghai," World Book Encyclopedia (2002), January 1, 2002. www.elibrary.com

LESSON PLAN

GRADE LEVEL/SUBJECT: 10-12/Economics, International Relations, World History, International Baccalaureate Programs (IB), Current Events

PURPOSE:

To present activities to be used in a variety of classroom situations in order to enhance student understanding of the Asian economy and its significance globally.

OBJECTIVES:

Students will be able to:

Describe the history of Shanghai.

Illustrate the importance of this city to the Chinese economy.

Compare and contrast the financial development of Shanghai with other major Asian financial centers.

Evaluate the reasons for the success of the Shanghai Stock Market.

Forecast the future of this institution in the Asian economy.

MATERIALS:

Background information provided.
Resources on Shanghai available at your school's Media Center and the Public Library System in your area.
Background information available through Internet "search engines."

ACTIVITIES:

May be assigned as group activities or as individual tasks. They may also be designed as preparation for related presentations either by individuals or groups.

Develop a timeline of major events in the history of Shanghai.
Use charts and graphs to illustrate the city's economic significance.
Draw a bar graph comparing Shanghai's industries and their profits to those of other major Asian cities.
Create a prospectus for the Shanghai Stock Market, which encourages foreign investment.

EVALUATION:

Individual assignments should be graded by the teacher using established criteria.

Group activities, presentations and projects may be evaluated by teachers and students using the following criteria and scale:

Content Creativity Clarity

1 = Superior (A) 2 = Excellent (B) 3 = Good (C) 4 = Fair (D) 5 = Poor (F)

To print this lesson plan: If your browser does not print frames, try this -- click the right button on your mouse and select "Open Frame In New Window." Then use your browser's print function to print that page. Another option -- choose "Select All" from your browser's pull-down Edit menu. "Copy" the highlighted text and then "Paste" it into any text editor. You can then print it from the text editor. The Japanese Island of Okinawa is located in the East China Sea, in a subtropical zone of islands. Okinawa was known as the Ryukyu Kingdom, a trading nation with a distinct culture. For 400 years, starting during the late 1300's, this island nation was ruled by royalty and developed a flourishing trade with China, Japan, Korea and the East Indies. Consequently, Okinawans have their own distinctive music, a unique language, and their own steadfast traditions that began hundreds of years ago. Its inhabitants built a reputation as sugar cane growers, fishermen and weavers.

But throughout its history, Okinawa has been a pawn in global power politics. Ryukyu was first influenced by China and later annexed by Japan in 1879. Okinawa was the scene of ferocious fighting in the later stages of World War II and has served as a major base for the U.S. military ever since. 47,000 American troops are still stationed there.

The literature on Okinawa is divided on the subject of the U.S. military. Many articles blame accidents and crimes related to American GIs as an obstacle to the island's tourist industry. They claim that a diversified economy is not possible where prime real estate is used by the Pentagon. Others claim that islanders see the American presence as a trade-off. The heavy infusion of subsidies from Tokyo (to compensate for the bases) is welcome where the unemployment rate is 9% and the living standard is far below that of the mainland. These articles claim that when Okinawan Governor Masahide Ota challenged both Tokyo and Washington about the Marines' presence in Okinawa, he was voted out of office in late 1998. His successor, Keiichi Inamine, turned out to be a willing partner for Tokyo and Washington. As a result, on top of the $80 million set aside in 1998 to promote economic development in the region, local towns willing to accommodate U.S. troops and facilities can count on an additional $20 million annually through 2003. Additionally, in July of 2000, Okinawa beat out other Japanese cities to host the G7 economic summit (of the leaders of major industrial nations). This event brought considerable profits to local resorts, retailers and taxi drivers.

Critics claim that Okinawa would be far better off recovering its status as a prime resort destination, (it boasts some of the best coral reefs in the Pacific) and allowing foreign investment to make its economy self-sustaining. They assert that for every concession made to Tokyo, Okinawa should pressure for more money to make the economic transition it justly deserves.

There are other potential sources of income. The Japanese government says 457 Okinawans are at least 100 years old - 34.7 centenarians for every 100,000 islanders, the highest ratio in the world. The U.S.A has about 10 centenarians for every 100,000 people. On Okinawa, life expectancy is 81.2 years, the longest in the world. Statistics show that the average Okinawan woman lives to 86 years of age and the average man to 78. Recent studies show that Okinawans not only live longer, they also live better--with elderly suffering far lower rates of dementia than their U.S. counterparts and less than half the rate of hip fractures. Okinawan entrepreneurs believe these traits can be reproduced in other parts of the world. They will attempt to do so by marketing the mixture of diet and exercise that has kept Okinawans living longer and better.

?Chapter Four: The Economic History of Postwar Okinawa,? www.niraikanai.wwma.net/pages/base/chp4-1.html (Lengthy and detailed)

Ashitani, Tetsuo, ?Japan Marks 25th anniversary of Okinawa?s return,? Kyodo News International, Inc., November 21, 1997. (NewsBank Search)

Bremner, Brian, ?How Okinawa Can Outmaneuver Its Masters,?BusinessWeek Online, July, 11 2000. www.businessweek.com

Lee, May, ?Okinawa?s culture not well-known to outsiders,? CNN World News, November 3, 1995. www.cnn.com/WORLD/9511/okinawa/index.html

Wiseman, Paul, ?Fabric of a long life,? USA Today, January 3, 2002. (NewsBank Search)