Gentrification parallels with massive demolition and displacement in Chinese cities in the post‐Reform era. The article studies the ways in which gentrification of cultural taste and lifestyle is played into state‐sponsored neoliberal space and class making. Focusing on Shanghai—China's gateway to modernity and leading Instagrammable Internet‐famous (wanghong) city—the article examines how the new Shanghai middle class becomes the patron of gentrification and how spatial consumption in the age of social media produces new forms of urban inauthenticity and social distinction. Through case studies of the transformation of two major historic Shanghai architectural forms—vernacular alleyway (longtang) houses and Western‐style garden villas (laoyangfang)—into wanghong scenes, the article argues that by “wanghongnizing” cities like Shanghai and gentrifying ordinary people's everyday life, the Chinese state strategically replaces collective memories of radical urbanism and displacement with propagation of an aestheticized middle‐class xiaokang society and romanticized “Chinese Dream.”