On a blustery October day, the remaining fragments of what was once Shanghai’s hottest bar and restaurant are being liquidated. The champagne glasses cost Rmb28 ($4), waistcoats hang from a Rmb1,500 lime-green screen, and a framed poster from the 1930s leans against the wall.M on the Bund closed its doors for the last time in February 2022, in the midst of China’s Zero-Covid policy. By the time its contents were finally sold off last month, they had already become relics of another era. For more than two decades, the restaurant had been the regular haunt of business people, financiers and visiting delegations to a booming city of over 20mn people. But if they were to visit Shanghai now, “they wouldn’t believe it’s the same place,” says Michelle Garnaut, the Australian restaurateur who founded the venue in 1999.More than 15 years after China pledged to turn Shanghai into an international financial centre, the port city has failed to live up to its early promise. Once positioned as the frontier of China’s gradual incorporation into a global economic system, its recent exceptionalism is today overshadowed by a growing rift between Beijing and Washington.In a city of shipping routes and western concessions, where the distinctive trees that line its avenues were initially introduced from Europe, an inward shift across Chinese politics that accelerated during the pandemic has shaken Shanghai’s international identity. Some content could not load. Check your internet connection or browser settings.A beneficiary of decades of economic growth since the country opened up in 1979, the city is the world’s biggest container port and a base for many foreign companies. But it now sits uneasily amid a new era of trade protectionism and mutual suspicion across the Pacific, and is increasingly disconnected from international finance.American law firms, once participants in huge cross-border financial flows, have left the city as foreign investment plummets. No western bank has participated in a single IPO on Shanghai’s stock market this year, and, in a domestically-focused market, the need for foreign staff is increasingly unclear. Asset management firms that flocked to the city in the hope of a loosening of China’s capital controls must reckon with the prospect that Beijing will tighten them instead.For Xi Jinping’s government, this is not necessarily a problem. A critique of finance that arose after the global crisis of 2008 has gained salience domestically, especially after a 2015 stock market crash and anti-pandemic measures that reasserted the dominance of the state. Beijing is now prioritising an internationalism based around exporting infrastructure and green technology that echoes its domestic model, and in which Shanghai plays a role.Many of the world’s leading foreign financial firms maintain at least a nominal presence in Shanghai, hoping for one of the many U-turns that have characterised its history. But, like the colonial-era banks and counting houses that neighboured the out-of-business M on the Bund, they risk being reduced to a facade.“This was really the last frontier of capitalism [in China],” says one person present at the fire sale, referring to the buzz of the restaurant’s heyday. “It’s all gone. It’s all changed.”In the early 20th century, Republican-era Shanghai was, for some, an oasis of free markets. On the Bund, the waterfront mirrors the architecture of London or New York — a legacy of British, French and American concessions established in the 19th century, carved out of the Chinese government’s sovereignty.A century later, after decades of closure, market forces seemed to be in the ascendancy once again. In spring 2009, Beijing’s state council, the country’s top decision-making body, set an ambitious target: Shanghai would become an international financial centre by 2020.Even if the term was not strictly defined, it signalled a wider opening-up and came a year after the Beijing Olympics had alerted the world to China’s economic miracle. The goal of becoming an international financial hub is “highly desirable” not only for the city, but for China more broadly, the Brookings Institution wrote in 2011. But it also noted the disappointments of Tokyo and Frankfurt, which had once held similar ambitions, and the importance of the rule of law. Shanghai was “on track” to meet its target, the American Chamber of Commerce said a year later in 2012.“I got excited, and I kept telling all the young people, the future of finance is Shanghai,” recalls Han Shen Lin, formerly deputy general manager for Wells Fargo bank in China and now China Country Director for The Asia Group, a US consultancy. At that time, “everyone thought China would succeed in loosening its capital controls,” he adds, a reference to the government’s practice of tightly controlling the flow of money in either direction across its borders. The project, he adds, also hinged on the free movement of information and people — both of which were tightly controlled in China.A view of the Pudong financial district from M on the Bund, which closed in February 2022 in the midst of China’s Zero-Covid policy More
