Quotes of the Day

On a cold, gray afternoon a year ago, I stood on the deck of our newly purchased, half-constructed house about an hour outside Shanghai, wondering what, exactly, I had gotten myself into. My wife, a Shanghai native, and I had moved back to China from New York City in the spring of 2004, and 21⁄2 years later we had decided to take the plunge. We bought a three-story, five-bedroom townhouse way out in the suburbs, in a town called New Songjiang, a place that was then — and remains now — very much a work in progress.

We had come here that day to see how construction was progressing. Our house, along with about 140 others, was going up in a development called Emerald Riverside. It sits on the banks of a tributary that dumps into the Huangpu, the river that cuts Shanghai in two about 28 miles (45 km) to the northeast. On that dreary afternoon I gazed out to the other side of the river, looking at the only significant patch of land for miles that was not yet being developed — about five acres (20,000 sq m) of green that local farmers still used to grow watermelons, which they then sold to the migrant workers building this town. On the far bank there was a ramshackle one-room brick house, where three of the farmers lived — a husband, wife and teenage son. They had no running water — they bathed and washed their clothes in the river — and the place was lit by a single bulb. In every direction just beyond the watermelon patch, office parks and houses and apartment complexes were going up, forming a cordon around the farmland that was drawing inexorably tighter. As it is in vast swathes of China, the new was replacing the old, and it was not doing so slowly. It was doing so in the blink of an eye.

I stood on the deck that day and watched one of the farmers who worked the watermelon patch, an older woman who would later introduce herself to us as Liu Yi, as she stared back at me across the river. I remember thinking to myself, My god, what must be going through her mind? Not only is the land she works on about to disappear, but there's this foreigner standing over there staring at her. Where did he come from and, more to the point, what in the world is he doing out here? The short answer is that my wife and I have become a tiny part of China's latest revolution. We got an off-the-shelf mortgage from the Standard Chartered Bank branch in town, plunked down 25% of the purchase price, and bought ourselves a piece of the Great Chinese Dream.

Best Years of Their Lives

For the past decade and a half, the frantic pace of urbanization has been the transformative engine driving this country's economy, as some 300-400 million people from dirt-poor farming regions made their way to relative prosperity in cities. Within the contours of that great migration, however, there is another one now about to take place — less visible, but arguably no less powerful. As China's major cities — there are now 49 with populations of one million or more, compared with nine in the U.S. in 2000 — become more crowded and more expensive, a phenomenon similar to the one that reshaped the U.S. in the aftermath of World War II has begun to take hold. That is the inevitable desire among a rapidly expanding middle class for a little bit more room to live, at a reasonable price; maybe a little patch of grass for children to play on, or a whiff of cleaner air as the country's cities become ever more polluted.

This is China's Short March. A wave of those who are newly affluent and firm in the belief that their best days, economically speaking, are ahead of them, is headed for the suburbs. In Shanghai alone, urban planners believe some 5 million people will move to what are called "satellite cities" in the next 10 years. To varying degrees, the same thing is happening all across China. This process — China's own suburban flight — is at the core of the next phase of this country's development, and will be for years to come.

The consequences of this suburbanization are enormous. Think of how the U.S. was transformed, economically and socially, in the years after World War II, when GIs returned home and formed families that then fanned out to the suburbs. The comparison is not exact, of course, but it's compelling enough. The effects of China's suburbanization are just beginning to ripple across Chinese society and the global economy. It's easy to understand the persistent strength in commodity prices — steel, copper, lumber, oil — when you realize that in Emerald Riverside construction crews used more than three tons of steel in the houses and nearly a quarter of a ton of copper wiring. There are 35 housing developments either just finished or still under construction in New Songjiang alone, a town in which 500,000 people will eventually live. And as Lu Hongjiang, a vice president of the New Songjiang Development & Construction company puts it, "we're only at the very beginning of this in China."

The Short March is underway across the country. "Everyone knows in its cities, China is building up — but it's also building out," says Jing Ulrich, managing director and head of research at JP Morgan in Hong Kong. In Beijing, a high-speed rail link will bring cities like Tianjin, 70 miles (113 km) away, into commuting distance by this summer. In places such as Chongqing to the west and Dalian in the north, says Ulrich, the same pattern of development is taking shape: up — and out.

Companies all over the world, who have fed China's long-running urban economic boom, are already beginning to benefit from its suburban phase. The average size of a house in New Songjiang is more than twice that of the average downtown Shanghai apartment, and now we, and our fellow suburban pioneers, are stocking up with stuff. In our house we have drapes that were made in Tianjin, and tile flooring from Kunming, but also bathroom fixtures made by Kohler (headquarters: Kohler, Wis.) and consumer electronics from Samsung and Panasonic. Our town's central shopping mall — which looks as if it could be in White Plains, N.Y., or the San Fernando Valley of Los Angeles — has had a KFC and a Pizza Hut up and running for the past year. In late summer, New Songjiang passed through one of globalization's initiation rituals: Starbucks opened its first branch here.

The economic effects of the Short March are the easiest to discern. Others — political, social — are like aftershocks of an earthquake: you know they are coming, even if you're not quite sure when, or exactly how powerful, they will be. One, I'm certain, will be environmental. New Songjiang is supposed to be linked, by 2010, to central Shanghai when a spur on the light-rail system is completed.

But everyone who moves here will still own a car, because this is a suburb, right? When we lived in Shanghai, my wife walked out of our apartment to a street market a few blocks away to buy vegetables every day. Here, you drive to the store. In China, the car, almost as much as the new apartment or house, is a badge of honor among the newly minted middle class. If the neighbors I've met are any indication, many people will still drive into town rather than commute on a crowded train. This, despite the fact that it costs the equivalent of some $6,000 to get a license plate that allows you to drive on Shanghai's highways. Zhang Wenming, who lives just behind us, drives to work every day and says he'll continue to do so. But Shanghai is already gridlocked and smoggy and getting worse by the day. That's part of the reason my wife and I, with a 3-year-old daughter in tow, moved here — our daughter had developed a persistent hacking cough that she couldn't seem to shake. By 2010, in and around Shanghai there will be some 2,600 miles (4,200 km) of new highways that didn't exist in 2000. And millions of new cars will be traversing them. Shanghai may make Los Angeles on a bad day look as clear as a bell.

Ironically, all of these new suburbs in Shanghai, mine included, bill themselves as environmentally friendly. And relatively speaking, they are. There is green space here — large grassy parks and small lawns, which don't exist in the city. But things have hardly started yet. I recently asked a retired Shanghai city planner how much thought had gone into the environmental consequences of the Short March. He sighed. "We know people will probably have to drive more. There will be more cars on the streets everywhere. But there are other important factors to consider." Such as? He paused, and just rotated the forefinger of his right hand in front of him, over and over. His meaning was clear enough. Nothing is more important to China's leadership — nothing — than keeping the economy ticking over, in making sure those in the middle class have decent new places to raise their families, and that there are jobs for workers in places where, not long ago, there were only watermelon fields.

If You Build It, Will They Come?

It has been less than 10 years since this land was nothing but farms and mosquito-infested swamps. The truth is, there are days even now when it still feels a little lonely. Tens of thousands of square feet of retail space have already gone up, about half of which sit empty, at least for now. On most days this past summer there was so little traffic on the streets in town that drivers didn't pay attention to the traffic lights — except, that is, the student drivers from the Li Zhong Driving School, who creep slowly down the town's wide, untrafficked thoroughfares. But life won't feel lonely for long. There are 200,000 houses and apartments either under construction or planned for this city. Multiply that by 10 — the number of satellite cities going up around Shanghai alone — and you get a sense of the economic forces at work. To the developers who conjured this place out of nothing, the payoff is as close to a matter of fact as any investment can be. Listen to Guo Guangchang, the co-founder and CEO of Fosun Group — whose subsidiary, Forte, is one of the primary developers here — and the message is clear: if you build it, they will come.

Guo, 40, is one of the richest men in China. He founded his company, now a huge conglomerate, in the early 1990s, with three friends from Shanghai's Fudan University. Today, like so many successful Chinese businessmen of his generation, he seems preternaturally calm when talking about why he believes the future is going to look a lot like the present: new houses go up, new houses get bought, more new houses go up.

We sat in his office on Shanghai's famous Bund, and I half-jokingly told him I was a little nervous about my investment. Analysts' reports these days are full of tales about China's real estate bubble. Was it possible that the skeptics might be right — that Shanghai itself is already overbuilt, and the suburbs Guo is helping create are a bridge way too far? He looked at me as if I were from another planet, then smiled politely. "There is only one Shanghai in China," he said. "People want to come here from all over the country. People need good quality housing at a decent price, and that will continue to be true for a long, long time. Sure, there might be periods where the market slows down a bit; but the underlying things that are driving it, no, they won't slow down." There are about 20 million people in Shanghai now, Guo noted. In 20 years, he said, that number could easily double.

And that's where the simple comparison to the U.S. after 1945 breaks down. Journalist turned businessman Jim McGregor, one of the most astute observers of modern China, says that the country is cramming three different eras of U.S. history into one. In U.S. terms, the postwar prosperity that fueled the flight to the suburbs is happening at the same time as the 19th century Industrial Revolution that lured people from the farm to the cities, and also as Progressive Era efforts to rein in the worst abuses of capitalism take shape. I asked Guo if he agreed. He nodded, but added a caveat: "What's different about China is the sheer scale of things. The simple fact is there are still 800-900 million people living in poor, agricultural provinces. That's about three times the population of the United States."

Guo, suffice to say, doesn't believe you can keep them down on the farm, and neither does anyone else. So people will continue to pour into Shanghai — and other major cities — and a good portion of the middle class will escape to the suburbs as the cities grow ever more crowded. So no, Guo added, he doesn't lose sleep over the prospect of real estate booms and busts here. "And neither," he added, smiling broadly, "should you."

The Floating Factory

China's move to the suburbs is critical not just to the country's economic future, but also to its politics. As the retired city planner said, there is nothing more important to the central government than making sure economic growth continues, and that the benefits of that growth are spread widely. More than anything, this is what gives the communist leadership legitimacy. All across China, towns like New Songjiang are built on the backs of migrant workers — people who have moved from other provinces to earn better money as construction workers. An estimated 114 million workers in China now are migrants, and roughly 15% work on construction sites throughout the country, usually far from their home towns or villages. Unlike manufacturing work, where millions of unskilled workers have full-time jobs, the migrants building China's suburbs simply move on to the next site when one is finished, as if they worked in a floating factory. Making sure there is a next one, therefore, is critically important.

In New Songjiang, indeed, most of my neighbors are here-today-gone-tomorrow migrants, not middle-class Chinese. Henry Ford famously developed the assembly line to make cars so cheap that his workers could afford one. That's not what's happening here. The people building the houses of suburban Shanghai have no real chance of ever owning one.

Consider Qiu Haiyan, 22, from Henan, a province in central China with an average per capita income of $1,100 per year. She first found her way here working on a barge that carries bricks up the river that flows past our house. Qiu has the build of an Olympic weight lifter, with thick, powerful legs, and she and other work-gang members would offload the bricks on a wide wooden plank attached to a rope that they would sling across their shoulders. The subcontractor who built our development estimates he used about 70,000 bricks at Emerald Riverside. Qiu and her work gang delivered all of them.

For lugging bricks 12 hours every day, in Shanghai's suffocating summer heat and stinging winter's chill, Qiu earned 1,500 renminbi (about $200) per month before she managed to get a job — and a raise — at a construction site not far from Emerald Riverside. Now she makes about $220 per month and, she says, the work is not as backbreaking. "We work about 12 hours a day," she told me one recent evening, sitting outside a big worker's camp, "and get one day off a week." I asked if she, like so many migrants, has family back home, and whether she sends money back to them. She nodded. "I support my mother and father and my aunt; they were farmers but are too old to work now. I try to send them something every month or two." She had last seen them two years ago, she said. And when would she see them again? She shrugged. "I guess when I can't find another job here."

The camp she lives in is typical of those housing migrants in the more prosperous cities across China. In a two-story building made of concrete slabs and thin aluminum sheets that seem no sturdier than cardboard, there is no heat, no water, and the workers, around 400 in all, sometimes live four to a room. It is freezing in the winter, stifling in the summer. Most of the workers are men. They cook their evening meals on small electric water heaters and, during summer and fall, after work they sit outside and smoke or play cards and drink beer; it's a hard life, and the workers find diversions wherever they can. One day last winter when our house was under construction, I noticed some Chinese characters scrawled in the dust underneath a windowsill. I couldn't read them so I called over to my wife to see if she could. She laughed. It was an important message: it named a local karaoke club as the place to go "for good prostitutes."

Hu Jintao, China's President, has said repeatedly that the gap between rich and poor is one of the government's central concerns. In New Songjiang, the reasons for his insistence become obvious. Theoretically, migrant workers are supposed to receive some health-insurance benefits from the companies that hire them. But many, particularly day laborers who hook up with small contractors, do not. I spent one evening a few months ago in the emergency room of the huge, modern hospital in New Songjiang. In the space of about three hours, five construction workers were admitted, including one who had tumbled three stories from an apartment building under construction. He survived, but had broken his back. I asked two of his co-workers whether he thought the company they worked for would pay his medical bills. One of them replied, "Probably not,'' and said if need be they'd take up a collection for him among fellow workers and hope that his family from neighboring Anhui province might also chip in.

Meet the Neighbors

There are 148 houses and townhouses as well as three 11-story apartment buildings in Emerald Riverside, and Fan Wei, the president of Forte and Guo Guangchang's deputy, says they are all sold. Slowly, as the day draws nearer that the town will be linked to Shanghai, people are beginning to move in. Until recently, one of our neighbors was Zhang Shuyi, 35, who owns his own small advertising agency. He lived just behind us with his girlfriend and a big mutt of a dog who occasionally scared the daylights out of our daughter, Abby. (Zhang, in typical Shanghainese fashion, sold his house three months ago for a 20% profit and moved to another place not far from here.) Another couple are both engineers who work for Intel, helping design the chipmaker's new factory in Dalian. Another young father, Chen Jun, 36, is a successful clothing wholesaler. These are not rich Chinese, but people who consider themselves solidly middle class. Chen says proudly that he's "the first in my family to own a car as well as a real house." Their homes are about the same size as ours, and they probably paid roughly the same price as we did ($165,000). Most have young children (this being China, usually just one) and have also brought parents or parents-in-law with them, also common in China.

Their reasons for moving way out here are familiar. For some, it's proximity to work. The old Songjiang, the neighboring town, is heavily industrial, with a string of modern factories — many foreign-owned — that runs for miles. One friend, a guy I play basketball with at a gorgeous new public sports facility, is an engineer for SMIC, the large semiconductor company that has a plant not far away. This friend — I'll call him Yu Xiang — has a cousin he has visited who lives outside Los Angeles, and says that New Songjiang reminds him of the area. "Now I call my cousin and kid him: 'I'm living in the Valley too, but at about a tenth of the price!'"

For others, as for us, it was the cleaner environment, a little bit of green and a lot more space. "I love it out here," says Chen. "It's quiet, and the air is better." Two couples we've become friendly with say they want to have a second child — now permissible in Shanghai since the government loosened the one-child policy a bit in 2004. All this at a price much cheaper than it would be to buy a decent apartment in Shanghai (let alone a house in the San Fernando Valley).

These motivations seem so universal that sometimes it's easy to forget where you are. But that's a mistake. There is genuine if sometimes subtle tension even in booming, middle-class China, and some of it is evident every time I go out for a bike ride, past the security guards at the entrance of Emerald Riverside. The developments here aren't exactly gated communities, but all of them are guarded, and for a legitimate reason: the fault lines between the migrants and the middle class are very real. Petty crime — theft, primarily — is common; and rarely do the two groups interact. Qiu, the young woman who loaded bricks, told me I was the only "rich" person she had ever had a long conversation with since she started working here two years ago. The only thing that unites the two groups is China's continued growth. My middle-class neighbors, like Yu Xiang, take it as a given. "As long as there is economic development that will allow me to work and raise my family in a nice new area," he says, "that's what I hope for now. My whole family does. We hope to stay here a long time."

The migrants, of course, hope to move on. Before my wife and I bought a car here, we used to call a guy named Shi Guozheng, 27, from Anhui, who was a taxi driver of sorts. Shi had a battered old van, and made a living transporting migrant workers back and forth to their home towns. He was married, and often his wife, Lin, was in the car on our journeys into town. Over time my wife and she became friendly. One day last summer, they had tea together and Lin told Joyce she was pregnant, and that she and her husband were moving away from New Songjiang to a neighborhood in Shanghai with a lot of new construction, where her husband would continue to try to make a living shuttling workers around. Lin came over to our house one evening just before leaving; Joyce was giving her some of Abby's old baby clothes. We sat up on our deck, overlooking the river and the ever-shrinking patch of green on the other side. I asked her whether, and when, she and her husband might settle down — and what they might do, and where. She just laughed. "Oh, we'd like to live back home in Hefei [Anhui's capital] some day, but we don't know when. It's better here for us, at least for now." A little while later, Joyce handed Lin the bundle of clothes, and off she went.

I've thought of that family frequently. People outside China always want to know what will spur political change, what will turn an authoritarian dictatorship to democracy. Conventional wisdom says it happens when a society develops a solid middle class with rising expectations. That, anyway, is the story of Taiwan and South Korea. But in China, my neighbors, even though they are often, in private, bitterly critical of the government, seem content to leave it well enough alone. Having made the Short March, they have a vested interest in stability.

I think trouble — and change — comes the day Shi Guozheng doesn't have another place to move to, another job to go to. It's not the people living the Great Chinese Dream — with the new house and the car and the dog and maybe a second child on the way — that the government needs to worry about. It's the people who build that dream for others, and then move on, hoping to do it again somewhere else. They, too, are vested in the country's economic miracle. But should that miracle somehow turn sour, look out.

• Bill Powell/Shanghai