COLUMN ONE : ‘The New Religion Is Money’ : After 40 years of Communist suppression, Shanghai is regaining its image as a brassy, flashy metropolis. The difference is that the Chinese--not Westerners--are in charge.

Back when Shanghai was known as the Paris of the Orient, part of its skyline was dominated by two huge cartoon figures.

“High overhead a giant Chinese baby was shown at its mother’s breasts, refusing to suck,” Barbara Walker, a chronicler of the 1920s scene, wrote of the neon baby-formula advertisement. “It turned away with a grimace of disgust, then complacently accepted a long drink of patent milk, which glugged visibly in the bottle. Finally, the giantess’ milk was squirted out of her nipples in a fireworks display of stars.”

Wild, exuberant, lusty, sinful, fabulously rich and disgustingly poor, Shanghai was the preeminent Western gateway to China. The greatest financial center of East Asia--and the birthplace of the Chinese Communist Party--it was fabled as an adventurer’s paradise.

The 1949 Communist revolution seemed to end all that. The foreigners were expelled. Prostitutes were rounded up and assigned factory jobs. Opium dealers faced execution, and capitalists lost their fortunes. The neon lights came down. Night life died. Shanghai’s history was pilloried as one of unmitigated decadence and corruption.

But today, with backing from central authorities, the city has suddenly reclaimed its old pride, passion and flamboyance.

The gambler’s spirit of Shanghai’s people powers a reborn stock market. Construction crews are furiously building the core of a modern city in the Pudong special economic district, just across the Huangpu River from the grand 1920s-era European buildings of the bustling old riverfront Bund.

Foreign participation is eagerly sought to help transform this 135-square-mile formerly rural zone into China’s most important center of trade, industry and finance. Total Chinese and foreign investment in Pudong is projected to hit $14.5 billion for the six-year period ending in 1995.

With 13 million people, half in its urban core, Shanghai has the weight to influence its entire region.

“Shanghai should become the ‘dragon’s head’ for the economic development of the Yangtze River Valley--when it moves, the body follows,” said Zhang Puxian, a spokesman for the Pudong Development Office. “Our goal is very clear. We hope that early in the next century, we can restore Shanghai’s status in the world.”

After senior leader Deng Xiaoping rose to power in 1978, he authorized south China’s Guangdong province to take the lead in reforms, including establishment of several “special economic zones” with quasi-capitalist policies. Guangdong raced forward.

Meanwhile, Shanghai--traumatized, confused and locked in the chains of central planning--stagnated for another dozen years.

Shanghai got its big boost a year ago, when Deng visited and declared that his “biggest mistake” had been failing to include the city among the special economic zones set up in 1980.

By eliminating lingering doubts about the political correctness of capitalist-style reforms, Deng’s comments set Shanghai free to make up for lost time. Commercial districts boomed and Pudong raced forward. “It was as though the lock had been turned, the door opened and out rushed the people,” a Western diplomat said.

“It’s amazing to see how people are spending,” said a foreign banker, who like the diplomat asked not to be named. “There are fur shops in Huaihai Road where you see people--Shanghainese--buying furs at between 2,000 and 20,000 yuan ($350 to $3,500). They’ve been craving for these things for so many years. Even if they had jewelry, they hid it. . . . All of a sudden there’s no more control. No one tells them, ‘Do this, do that.’ The Communist Party just tells them to get rich. . . . The new religion is money.”

Shanghai Mayor Huang Ju, in an interview with the official New China News Agency, said authorities are determined to boost Shanghai’s economy by at least 10% a year to make it “one of the world’s economic, financial and trade centers by 2010.”

The city’s economy grew 15% in 1992, with industrial output up 21% and exports up 22.5%, according to official statistics. Top growth items included telephone equipment, cars, household air conditioners and video recorders.

The new commercial spirit is most visible along Nanjing Road, the premier street of pre-revolutionary China, which in the past year has recaptured its former glory. Remodeled gold jewelry shops and fancy department stores are packed with goods and jammed with customers. Neon lights have sprouted again, electrifying the evenings with energy and excitement.

At the Rong Hua Chicken Restaurant, music blares on an outdoor loudspeaker while a neon signboard flashes news, cartoon-illustrated slogans and the day’s stock market closings. Food and clothing stalls in the city’s night bazaars do a booming business.

The scene is reminiscent of the city’s flashiest years, in the 1920s and ‘30s. Ruth F. Weiss, 84, a longtime resident of China who was born in Vienna and lived in Shanghai from 1933 to 1937, recalled in a recent interview how the neon lights then were “a fantastic sight.”

“Nanjing Road was the shopping center,” she noted. “There was Wing On and Sincere--they were department stores. They also had restaurants. Sometimes what went on in them was not necessarily very reputable. There was also the chocolate shop, and Jimmy’s Kitchen, which served foreign food.”

Old-style luxury with a modern twist has been reborn at places like the Xinxin Beauty Center, where both men and women go for haircuts, permanents and other health or beauty services.

On its best days, the shop pulls in $5,000, manager Chen Laiyuan said. “In all of China, it is Shanghai people who love beauty the most,” he said. “They are the ones who most love to dress up. They like new things.”

Women caught up in the city’s latest fashion fad pay $30--more than a week’s wages--to have Xinxin’s experts tattoo black lines around the edges of their eyes. “It’s convenient. I don’t need to put makeup on,” one teary-eyed but happy customer said after completing the slightly painful procedure.

Some of the new trends provoke sharp complaints. The Shanghai newspaper Liberation Daily, for example, reported that children are spending too much time playing video games when they should be studying.

“There are more than 460 video game parlors registered in Shanghai, with more than 3,000 machines, plus many that aren’t registered,” the newspaper said. “Some are open from morning to midnight. Some are not managed strictly, and gambling machines that are like ‘money-eating tigers’ are mixed in with the video games. They swallow children’s money and poison their souls.”

New wealth and relaxed controls also bring new opportunities for crime, including everything from burglaries and assaults to fraud and prostitution.

Shanghai’s newspapers report crimes every day. Typical was a recent story in Liberation Daily that told of Chen Guoqian, a man in his 80s, who was sentenced to five years’ imprisonment for managing two prostitutes, including a truant schoolgirl. Chen himself “participated in the licentiousness,” it said.

A crackdown on prostitution, bolstered by a tough new national law that imposed lengthy prison sentences on those convicted of pimping, was launched in 1991. Police announced then that 580,000 people involved in prostitution had been arrested nationwide during the previous 10 years.

Nevertheless, prostitutes can still be spotted at bars, discotheques and hotel lobbies in many cities, especially in southern China. But today’s resurgence of crime, prostitution and gambling pales in comparison with old Shanghai.

“In those days, Shanghai was called ‘sink of iniquity, paradise of adventurers,’ ” Weiss noted. “There were the gunboats of all the nations tied up out at the Bund--Britain, U.S.A., Italy, France, etc. When the fleet was in, there would be hordes of--they looked like little children, really--they were girls from the countryside that were sold to brothels, and the madams stood in the background to see that they did work. They accosted every sailor that went by.”

Hedonism and greed invigorated Shanghai from the very beginning of its modern history. A minor port for many centuries, Shanghai began to arise when Britain defeated China in the 1839-42 Opium War. As a spoil of war, Britain won approval to establish a foreign settlement here. Fortunes were quickly made from the immensely profitable exchange of Indian opium for Chinese silk and tea. Profits fell off in the late 1800s, as Chinese turned to growing opium themselves. But Shanghai, near the mouth of the Yangtze River, still prospered as a center of commerce and industry.

By the 1920s it was “one of the most cosmopolitan cities the world had ever known: All the gamut of Western and Asian humanity was there, from Jewish tycoons and self-styled White Russian ‘countesses’ to Annamese gendarmes and Filipino bandleaders,” Lynn Pan, an author specializing in Shanghai history, wrote in an introduction to the city. “An English visitor . . . caught its ambience nicely when he described a woman he saw sitting alone in a nightclub: Dressed all in green, she held a green cigarette between her lips and had a glass of creme de menthe on the table in front of her. On other nights, she would be seen in red velvet, sipping cherry brandy and smoking a rose-colored cigarette.”

Wealth and sophistication coexisted with unspeakable poverty. Merchant ship captain W. J. Moore recalled Shanghai’s degradation in a memoir of life in the 1930s: “The beggar-boats . . . would spend all day lying off the big ships, an unkempt woman sculling to stem the tide, with a baby on her back and several ragged children scrambling about the leaky and dirty old sampan. They were waiting for the cooks and stewards to empty the galley slops over the side, for there was bound to be something edible for them to fish out of the dirty river.”

For much of the first half of the 20th Century, Shanghai was run by foreign bosses, warlords, corrupt Chinese bureaucrats and mobsters like Du Yuesheng of the infamous Green Gang.

Mao Tse-tung and other revolutionaries met secretly at a girls’ boarding school in the French Concession here in 1921 to establish the Chinese Communist Party. Several days after the conference began, it was interrupted by a stranger believed to be a spy from the French police. The 13 delegates quickly relocated to a houseboat on a lake outside Shanghai.

Communist troops took the city in May, 1949, after nearly three decades of political struggle and war. The screws soon began to tighten on the old elite. During political campaigns in the 1950s and 1960s, criticism of authorities, old foreign ties or even the petty jealousy of co-workers could lead to jail or execution.

Radical fervor reached a peak in the 1966-76 Cultural Revolution, when leftists led by Jiang Qing, the wife of Chairman Mao, made Shanghai their power base. Jiang, who first rose to fame as a Shanghai movie starlet, fell soon after Mao’s death. She and her closest allies were condemned as the “Gang of Four.”

During the long decades of radicalism, a brutal leveling was imposed on Shanghai’s society. But today the Communist Party itself is deeply involved in the renewed buzz of hedonistic materialism.

At the flashy Jingpin Department Store, a recently remodeled building with glass doors and mirrored columns, the store’s Communist Party boss, Du Jinbin, admitted that Shanghai’s new face bears a resemblance to pre-revolutionary days. But what is happening now is not a return to the past, he said.

“Welcoming foreign friends to Shanghai, to invest in the main part of the city or in Pudong, is something our country and people are doing themselves,” Du said. “In the 1930s, things weren’t under the control of the people of our country.”

Shanghai ultimately aims to take back from Hong Kong, its onetime poor cousin, the title of premier gateway to China. Most concerns for the future of the British colony, which reverts to Chinese sovereignty in 1997, center on whether its prosperity and civil liberties will survive. But a greater threat to Hong Kong’s status in the world may come from the possibility that Shanghai just might succeed.

The city’s development will focus on 10 major sectors, according to Mayor Huang: banking, trade, real estate, tourism, telecommunications, steel, petrochemicals, other chemicals, cars and household electrical appliances. Foreign investment is sought in many of these areas. Last year, the city approved 1,912 foreign-funded projects and attracted $3.3 billion in foreign investment, eight times the previous year’s figure.

Despite the aura of stagnation that hung over Shanghai for 40 years after the Communist revolution, many industries grew under central planning. Zhang, the Pudong official, stressed that over these decades, Shanghai built up a heavy industrial and high-technology base that in some ways is stronger than Hong Kong and south China combined.

“Shanghai can produce rockets that can put satellites in orbit,” Zhang noted. “Outside Shanghai there’s a nuclear power plant that we built ourselves. The technological conditions for Shanghai’s development are very good. There are more than 1,500 research institutes, and 450,000 scientific and technical workers. Its work force ranks first in the country.”

Reformers are now trying to whip inefficient state enterprises into shape by giving their managers more autonomy, then pushing them into the marketplace.

Zhu Daren, director of the Shanghai police department, noted in an interview with the Shanghai Legal News that these reforms are posing new challenges. Efforts to streamline state industries by firing staff members have angered workers, sparking strikes and slowdowns “and in some cases even attacks on the people responsible in the enterprises.”

Besides industrial reform, Shanghai officials place great hope in rapid development of the city’s stock market, which is seen as a key way to raise investment capital. Trading in the exchange’s 38 currently listed stocks takes place in what once was the ballroom of the luxurious old Astor Hotel. But construction is to begin soon on a new stock exchange in Pudong scheduled for completion by 1996.

The building itself speaks worlds about Shanghai’s dreams. In terms of physical size, it is expected to be the largest stock exchange in Asia.