For the past five years, the term ‘Shanghai’ has been ubiquitous in the discourse on urban development in India, particularly so in Mumbai, beginning in 2004 when Prime Minister Manmohan Singh declared in an electoral address his government’s ambition to transform Mumbai into Shanghai, even better it.

Gradually, the word has shifted from a proper noun to a verb, being invoked in Mumbai’s desire to “shanghai itself” or “be shanghai-ified,” with no relation whatsoever to the traditional dictionary meaning of ‘shanghai,’ to force or trick into a place of undesirable position.

In these new references, the Chinese metropolis is a clean, slum-free city, with tall skyscrapers and impeccably modern infrastructures. Even though most of Mumbai’s politicians and bureaucrats have only a vague idea of the governance practices in Shanghai, they implicitly attribute the “shanghai-ification” of Shanghai to China’s single party state, less public agitation, and seemingly limitless budgets.

But how has Shanghai been able to transform its built environment and attract international investment, while Mumbai has had more difficulty making these transformations? Party politics, authoritarian response, and financial resources all matter to a certain degree, but urban governance, and particularly political devolution of the Chinese state, has played a particularly crucial role in China’s urban transformation.

The differences in China’s and India’s political systems are substantial. India is a democratic country with regularly-held, directly contested elections while China is not. Meanwhile, with China’s gross domestic product (GDP) estimated at almost two-and-a-half times that of India, the country’s relative differences in wealth are significant. And, culturally speaking, Indians and Chinese are very different people with unique histories and distinct political cultures.

Despite the importance of these differences, they do not negate the effects that China’s political devolution has had on the transformations of Shanghai’s built environment in the past twenty years. And while similar efforts have been made in India to devolve political authority and resources to the local level, these efforts have been conflict-ridden and ultimately less successful.

Put simply, political devolution and empowered urban governance largely explain the different development experiences of Shanghai and Mumbai over the past two decades.

In the early 1980s, both China and India embarked on efforts to decentralize their governance institutions and devolve financial resources and decision-making authority to the local level. In China, these efforts were laid out by the Central Government in the sixth Five Year Plan (1981-1985). In a 1982 report on the plan, then-Premier Zhao Ziyang called for the use of large- and medium-sized cities as engines for economic growth. The plan gave metropolitan governments greater autonomy over urban policy in order to lease land and attract investment. Up to this point, limited authority and a strong anti-urban bias in socialist national policy had resulted in little investment in China’s large cities.

Even though Shanghai – like Mumbai – contained many capital-intensive industries and contributed the largest proportion to the national economy, the city’s revenue was tightly controlled by the Central Government. Shanghai was left with little revenue to reinvest in its housing and basic infrastructure. The reforms of the 1980s began to alter these arrangements and resulted in considerable administrative reshuffling over the next decade.

Among the changes introduced in Shanghai, the city’s geographic area was expanded more than 20 times, from 282 square kilometers to 6000 sq. km. (108.9 sq. miles to 2316.6 sq. miles). Administratively, the city was transformed from a single municipality into an urban region with nine central city districts, five inner suburban districts, four outer suburban districts, and one rural county. Each of these districts is administered at the municipal level, thus giving the municipality more authority over its regional economy. The municipality can now, for example, relocate industries to the new suburban districts and open up space in the central city districts for specialized service sectors. Recently, the power and authority to devise policies to attract investment capital have been further devolved from the city to district governments.

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Xuefei Ren is an Assistant Professor in the Department of Sociology and Global Urban Studies Program at Michigan State University.

Liza Weinstein is a Ph.D. candidate in Sociology at the University of Chicago.