Something old, something new: The 1990 re-opening of Shanghai’s stock exchange

Society & Culture

A stock exchange in a communist country was unlikely, but its location was unlikelier still, in the ballroom of a grand hotel with its own rich past.

Astor House Hotel in Shanghai. Image from Wikipedia.

This Week in China’s History: December 19, 1990

The notion of a communist country opening a stock exchange is jarring, and yet that’s what happened on December 19, 1990, when Shanghai’s Stock Exchange re-opened. It would be just the second stock exchange in a communist state, after Hungary re-opened its exchange six months earlier. But it was somehow fitting. The exchange’s history, like its city’s, had been tumultuous.

Originally founded in the 19th century, the Japanese invasion shut the exchange down in December 1941. It reopened in 1946, before being closed again by another invasion — this one by the communist People’s Liberation Army — in 1949. Now Shanghai was being called on to lead a rejuvenated economic reform policy, after the brutal suppression of the 1989 protest movement had called the principles of Reform and Opening into question. The stock exchange would be a symbol of that reform and opening.

The setting was as remarkable as the exchange itself. Today, Shanghai’s financial world evokes images of steel-and-glass towers and imposing ultra-modern architecture, but the scene in 1990 was from another era: Shanghai Mayor and later PRC premier Zhū Róngjì 朱镕基 presided over this marriage of capitalism and communism in a place both borrowed and blue: the Peacock Lounge that had once been the ballroom of the Astor House Hotel.

Before we get to the Astor House, a word on the stock exchange. Soon after Shanghai was opened for trade with Europe, residents began listing stocks in local companies for sale. In 1891, the Shanghai Stock and Sharebrokers Association opened, composed mainly of French, British, and American businessmen. This was renamed the Shanghai Stock Exchange in 1904, and, after merging with a rival organization in 1928, was the largest stock exchange in Asia. Through the 1930s the exchange flourished (no Depression in Shanghai!), linked electronically to New York so that orders could be placed between the two cities in mere minutes.

That whole world came to an end by degrees, starting in the 1930s, accelerating with the Japanese occupation during World War II, and gone for good, it seemed, after the founding of the People’s Republic. Many symbols of Old Shanghai were quickly erased or rebranded: the racetrack turned into People’s Square; red flags sprouted atop the skyscrapers of the Bund; streets were renamed. And the new communist government shuttered the stock exchange in 1949, liquidating and nationalizing its assets a year later.

Shanghai remained China’s largest city under the PRC, but its influence and prominence diminished. Some suggested that the city’s experience of colonialism, and prominent foreign ties, left it neglected. Even when the reform era began to reopen China’s economy in the late 1970s, government investment avoided Shanghai in favor of other cities.

But after 1989 the prospects for reform were in jeopardy, with China’s top leadership divided over how to respond to the protests centered on Tiananmen Square. Dèng Xiǎopíng 邓小平 and other reformers hoping to rejuvenate economic reform opening looked to Shanghai. In 1992, Deng would try to do just that with his secret southern tour in Shanghai, which ended in Shanghai, but 13 months before he began that journey, the opening bell of exchange rang out on the Bund, the center of an earlier burst of growth in Shanghai ranging from the late 19th century to the early 20th. What better symbol of what Shanghai could be — an economic battery that could jumpstart an entire nation.

But the specific spot where Zhu Rongji and other officials assembled in December 1990 had its own history (and the place to find it is Peter Hibbard’s gem of a book The Bund).

The Astor House began its life as the descendant of the first western-style hotel in China, Richards’ Hotel, which opened on a different location in 1846. The owner relocated to the confluence of the Huangpu and Suzhou Creek in 1858, and sold the hotel in 1859. From that point on it acquired the name–in English anyway–of the Astor House.

From the 1860s until World War II, the Astor House was one of Shanghai’s most prestigious addresses. Charlie Chaplin, Ulysses Grant, and Albert Einstein were just some of the guests who stayed there, but even more than the guest list it was the Astor’s social scene that made its reputation. As historian Andrew Field described it in his indispensable Shanghai’s Dancing World, “the Astor House was considered the most luxurious hotel in Shanghai in its heyday.” Its ballroom could accommodate 375 people after a 1923 renovation, and at its center was “a peacock shell for the orchestra composed of five colors with a rotating cylinder” that reflected light across the room.

Occupation by first Japanese and then American forces was not kind to the hotel, nor was its post-revolution confiscation by the government in 1954. In 1959, it re-opened as a state-run guesthouse under the name 浦江饭店 Pujiang Hotel. It was still authorized to accept foreign guests during this era, but other than that its resemblance to what had gone before was minimal.

It was in the post-1979 reform era that the Astor House — it returned to its old name in English, although it confusingly retained the name 浦江饭店 in Chinese — gained its new reputation. It was the first hotel in China to offer hostel beds. Backpackers could find a location on the Bund for a fraction of the price of more luxurious, newly built accommodation. In the 1980s, a hostel bed could be had for $8 a night.

Even as renovations took hold, the Astor traded in what realtors call “character.” The first decades of the 21st century were a golden age for travelers in the know. Centrally located, dripping in history, adequately renovated, a room in the Astor was hundreds of dollars less than alternatives along the Bund. I was lucky enough to stay there several times during that era. Once in one room that required a long walk down a narrow corridor where the surrounding rooms were all occupied by staff, and the hallway was usually filled with drying laundry, though inside I had 12-foot ceilings and a claw-foot bathtub. On another occasion I wound up in a room with a bathroom so large that my entire room in Hong Kong could have fit in it. One student group I led was lucky enough to have their buffet breakfast served in the peacock ballroom…complete with bandshell.

That ballroom was the same one that hosted the stock exchange in 1990, though that phase was short-lived, as the exchange moved to Pudong in 1998.

A reasonably priced, well-located, comfortable and historic hotel seemed too good to be true and so, eventually, it was. The Astor closed down in early 2018, and re-opened at the end of that year as the Chinese Securities Museum. The ballroom was restored to, of all its possible incarnations, its 1990 version: the Shanghai Stock Exchange. If you want to know how a hotel ballroom is converted into a trading floor, you are in luck: dioramas and exhibitions depict that particular slice of the hotel’s past (the landline hotels may seem the oddest artifact). Of all of the Astor’s historical turns to be made into a tourist attraction, this seems to me the least appealing one, but there it is.

Today, the Shanghai Stock Exchange is the world’s third largest, by market capitalization, but without doubt its present location lacks the charm of what had gone before.

This Week in China’s History is a weekly column.