After forty years of stagnation, the great metropolis of SHANGHAI, China is currently undergoing one of the fastest economic expansions that the world has ever seen. While shops overflow and the skyline fills with skyscrapers, Shanghai now seems certain, sometime in the twenty-first century, to recapture its position as East Asia's leading business city, a status it last held before World War II. And yet, for all the modernization in terms of infrastructure, lifestyle and availability of consumer goods, Shanghai at the turn of the millennium is nonetheless a city inextricably linked with its colonial past.

Shanghai is still mainly known in the West for its infamous role as the base of European imperialism in mainland China - its decadence, illicit pleasures, racism, appalling social inequalities, and Mafia syndicates. The intervening fifty years have almost been forgotten, as though the period from when the Communists arrived and the foreigners moved out was an era in which nothing happened. To some extent this perception is actually true: for most of the Communist period into the early 1990s, the central government in Beijing deliberately ran Shanghai down, siphoning off its surplus to other parts of the country to the point where the city came to resemble a living museum, frozen in time since the 1940s, and housing the largest array of Art-Deco architecture in the world.

Yet the Shanghainese never lost their ability to make waves for themselves, and, in recent years, China's central government has come to be dominated by individuals from the Shanghai area, who look with favour on the rebuilding of their old metropolis. In the mid 1980s, the decision was made to push Shanghai once again to the forefront of China's drive for modernization, and an explosion of economic activity has been unleashed. In this last decade, city planners have been busy creating a subway network, colossal highways, flyovers and bridges, shopping malls, hotel complexes and the beginnings of a "New Bund" - the Special Economic Zone across the river in Pudong, soon to be crowned with the world's tallest building . Symbolically, the central government recently constructed China's main money-printing mint near here, a move reflected in the high proportion of shiny new coins and bills in circulation in the city. With by far the most highly skilled labour force in the country, the long-suppressed Shanghai ability to combine style and sophistication with a sharp sense for business is once again riding high.

Not that the old Shanghai is set to disappear overnight. Although the pace of redevelopment has quickened in the past several years, the city still, in large parts, resembles a 1920s vision of the future; a grimy metropolis of monolithic pseudo-classical facades, threaded with overhead cables and walkways, bursting with the noise of rattling trolley buses and choked by vast crowds of purposefully scurrying pedestrians. Unlike other major Chinese cities, Shanghai has only recently been subjected to large-scale rebuilding. Most of the urban area was partitioned between foreign powers until 1949, and their former embassies, banks and official residences still give large areas of Shanghai an early-century European flavour that the odd Soviet-inspired government building cannot overshadow. It is still possible to make out the boundaries of what used to be the foreign concessions, with the bewildering tangle of overhanging alleyways of the old Chinese city at its heart. Only along the Huangpu waterfront, amid the solid grandeur of the Bund, is there some sense of space - and here you feel the past more strongly than ever, its outward forms, shabby and battered, still very much a working part of the city. Today, strolling the Bund is a requisite attraction for any visitor to Shanghai, and it's an intriguing irony that relics of hated foreign imperialism such as the Bund are now proudly protected by the Shanghainese as city monuments.

Like Hong Kong, its model of economic development, Shanghai does not brim with obvious attractions to see. Besides the Shanghai Museum, the Suzhou-reminiscent Yu Yuan Gardens, and the Huangpu River Cruise, there are few sights with broad appeal - many travellers leave the city with a sense of letdown. But the beauty of visiting Shanghai lies not so much in scurrying from attraction to attraction, but in less obvious pleasures: strolling along the Bund, exploring the pockets of colonial architecture in the old French Concession, sampling the rapidly maturing restaurant and nightlife scene (already in a league with Hong Kong, some feel), or in wandering the main shopping streets and absorbing the explosive rebirth of energy of one of the world's great cities.

Inevitably, many of the social ills that the Communists were supposed to have eliminated after 1949 are making a comeback as well. Unemployment, drug abuse and prostitution are rife. But the dynamic contrast that Shanghai presents with the rest of China is one that even the most China-weary of travellers will hardly fail to enjoy.