China's largest city, fast-developing Shanghai has aspirations to be the industrial, commercial, and financial powerhouse of Asia, ultimately overtaking Hong Kong and even Tokyo. In the past decade it has made giant strides to that end. Ten years ago Shanghai's Pudong area was a collection of paddies and huts. Today its Manhattan-like skyline looks down on multilane highways which, in turn, lead toward newly built factories and a recently opened international airport. Regenerating Shanghai to world-class levels is a matter of face for the Chinese government, a living example of China's capabilities and aspirations. Chinese president Jiang Zemin is from Shanghai; prime minister Zhu Rongji, the man behind China's accession to the WTO, is a former mayor who began the massive rebuilding program. Shanghai, located at the mouth of the Yangtze River, is the most important automobile-making center in China, predicted to produce 400,000 vehicles by 2001, up from the 236,000 produced in 1998. The two key foreign auto-industry players are Volkswagen AG and General Motors Corp. The German company set up shop in China a decade ago, and has seen its Santana saloon become the first choice of taxi drivers, midranking Communist Party officials, and company executives. GM, which has invested US$1 billion in its new plant, hopes to appeal to China's emerging middle classes. Apart from the auto industry, the other key manufacturing areas are electronic and telecommunications equipment, iron and steel, petrochemical and fine chemical processing, power station equipment and parts manufacturing, and home electrical appliances. In 1998 the total industrial output reached 589.7 billion renminbi (US$71 billion), an increase of almost 26% from the previous year. In addition to expanding its heavy-industry production, Shanghai aims to boost information-technology-related manufacturing. In the first half of 1999 the IT industry generated 38.7 billion renminbi (US$4.7 billion) in output, 23% more than in 1998. The area's chemical industry is important, generating 100 billion renminbi (US$12 billion) in 1998. A proposed chemical industry park already has attracted interest from German chemical company BASF AG and others. Shanghainese are notorious for being entrepreneurial minded and outward looking, but their city is a long way from reaching generally accepted international standards in some areas. The one-party state system in China has instituted a cumbersome, hidebound, and far-from-clean bureaucracy, for example, and the absence of a rule-of-law system leads to potential legal minefields. Last year's anti-American riots and trashing of the U.S. embassy in Beijing showed the volatility and xenophobia lying beneath the supposedly international surface of modern-day China. Most major companies, however, take the view that a presence in China is vital. Shanghai undoubtedly will achieve its aspirations to become a world player during this century.