Because people who have the power to make decisions are in the business of running the city for profit, and this profit does not come from tourism or successful urban spaces. The profit comes exclusively from the sale of city land. The boundaries of Shanghai have been fixed and the saleable land is finite. The “city fathers” (party operatives and their partners in the development business) focus on the expensive land downtown. What rises after the demolition – a madly profitable Xintiandi or a sad ghost like the Wulumuqi Lu/Wuyuan Lu wasteland – makes no difference; it's after the sale. There is no incentive for historic preservation. There is, in fact, no incentive for urban planning at all.
Don't let the word "conservation" fool you
In March 2016 the fate of the huge area between Jinling Lu and Fuxing Dong Lu, in the old town, will be sealed. The city asked several foreign architecture firms to evaluate the redevelopment plan from 2007. The plan includes carving two high-speed motorways through the old town. One highway running parallel to Fangbang Rd will intersect the old and charming neighborhood of Jinjiafang and Kongjia Nong. The other one will widen and extend Penglai Lu so that it cuts through the most densely populated historic area, skirting the southern wall of Shuyinlou and merging with the already cleared Zixia Lu that runs toward the river.
The developers’ proposals are supposed to take into account the city guidelines for the increase in density, buildings height, the number of floors, traffic capacity and green space. These guidelines are contrived so that the demolition of existing neighborhoods is inescapable. The city is seeking to approve the sale of the maximum amount of land. Although there are mandates for the protection of valuable historic buildings (the “intangible” list), only a handful of buildings are marked as such. The rest are “recommended to preserve” which is actually no protection at all. The city will favor the developer that argues “these lane houses are not unique and can be removed” and “this building is not important to keep, since everything else is getting demolished.”
This is what happened in Dongjiadu, where everything except the Catholic cathedral and the Sea Merchants’ Guildhall was flattened. The latter was on the "intangible" list, so it had to be left standing, although there is no plan to restore it or turn it into a museum. For everyone involved, it’s just an irritation; nobody wants to spend money on it.
The famous arcades on Jinling Rd are not protected, just “recommended to keep.” In anticipation of the land sale, they are being cleared of their residents. The future developer can knock down the historic arcades as long as they build arcaded buildings in their place. After the sale, the developer will usually push for more exceptions from government guidelines, and the city is almost always happy to oblige. There is little incentive to enforce preservation guidelines that are in effect. We’ve all seen cases when “protected” buildings, reduced to eyesores in the middle of empty lots, suddenly disappear overnight.
On the wave of the feedback I’ve been getting after the publication of Vol 1 of the old town history, I’ve entertained a hope that preservation advocates can make a change in Shanghai – that is, to save a little more of its historic areas. Alas, the “facts on the ground” indicate this won’t happen. Even government agencies in charge of preservation have no agency to do anything. If Shanghai loses all of its signature streets and becomes another pan-Asian metropolis, the city government will not bat an eye, having already pocketed the cash.