When the Communists marched into Shanghai in May 1949, they took control of the most important business and trading centre in Asia, an international port where vast fortunes were made while millions lived in absolute poverty. Whichever side you were on, life in Shanghai was rarely one of moderation. China's most prosperous city, in large part European- and American-financed, it introduced Asia to electric light, boasted more cars than the rest of the country put together, and created for its rich citizens a world of European-style mansions, tree-lined boulevards, chic café society, horse racing and exclusive gentlemen's clubs. Alongside, and equally part of the legend, lay the city famed for adventure, organized crime, gambling and prostitution, of gang wars, bloated bodies floating on the tides, of beggars, starving children and coolies, of hungry millions in thrall to their daily bowl of rice.

 

Inevitably, after the Communist takeover, the bright lights dimmed - the foreign community may have expected "Business as usual", but the new regime was determined that Shanghai should play its role in the radical reconstruction of China. The worst slums were knocked down to be replaced by apartments, the gangsters and singsong girls were taken away for "Re-education", and foreign capital was ruthlessly taxed if not confiscated outright (although Chiang Kaishek did manage to spirit away the gold reserves of the Bank of China to Taiwan, leaving the city broke). For 35 years Western influences were discouraged and often forcibly suppressed.

Contrary to Western interpretations, Shanghai's history did not begin with the founding of the British Concession in the wake of the First Opium War. Located at the confluence of the Yangzi River, the Grand Canal and the Pacific Ocean, Shanghai served as a major commercial port from the Song dynasty, channelling the region's extensive cotton crop to Beijing, the hinterland and Japan. By the Qing dynasty, vast mercantile guilds , often organized by trade and bearing superficial resemblance to their Dutch counterparts, had established control of economic and, to some extent, political control of the city. Indeed, the British only chose to set up a treaty port in Shanghai because, in the words of East India Company representative Hugh Lindsay, the city by the 1840s had become "The principal emporium of Eastern Asia".

After the Opium Wars , the British moved in under the Treaty of Nanking in 1842, to be rapidly followed by the French in 1847, and these two powers set up the first foreign concessions in the city - the British along the Bund and the area to the north of the Chinese city; the French in an area to the southwest on the site of a cathedral a French missionary had founded two centuries earlier. Later the Americans, in 1863, and the Japanese, in 1895, came to tack their own areas on to the British Concession which expanded into the so-called International Settlement. Traders were allowed to live under their own national laws, policed by their own armed forces, in a series of privileged enclaves which were leased indefinitely. By 1900 the city's favourable position, close to the coast and to the Yangzi River (the main trade route to the major silk and tea-producing regions), had allowed it to develop into a sizeable port and manufacturing centre, largely controlled by the "Green Gang", the infamous syndicate founded in the 1700s by unemployed boatmen, but which by the 1920s controlled the city's vast underworld network. Businessmen and criminals alike who flouted the Green Gang's strict code of behaviour were subject to "knee-capping" punishment - having every visible tendon severed with a fruit knife before being left to die on a busy sidewalk.

Shanghai's cheap workforce was swollen during the Taiping Uprising by the numbers who took shelter in the foreign settlements from the slaughter outside, and peasants were attracted in their thousands to the apparent prosperity of the city, and the jobs in the factories. Here China's first urban proletariat emerged, and the squalid living conditions, outbreaks of unemployment and glaring abuses of Chinese labour by foreign investors made Shanghai a natural breeding ground for revolutionary politics . The Chinese Communist Party was founded in the city in 1921, only to be driven underground by the notorious massacre of hundreds of strikers in 1927.

Even since 1949, the city has remained a centre of radicalism - Mao, stifled by Beijing bureaucracy, launched his Cultural Revolution here in 1966. Certain Red Guards even proclaimed a Shanghai Commune, before the whole affair descended into wanton destruction and petty vindictiveness. After Mao's death, Shanghai was the last stronghold of the Gang of Four in their struggle for the succession, though their planned coup never materialized. Today, many key modernizing officials in the central government are from the Shanghai area, including President Jiang Zemin and Premier Zhu Rongji, both former mayors of the city.

As well as an important power-base for the ruling party, Shanghai has always been by far the most fashion-conscious and outward-looking city in China. The Shanghainese are renowned for their quick wit and entrepreneurial skills. Many fled to Hong Kong after 1949 and oversaw the colony's economic explosion, while a high proportion of overseas Chinese successful in business elsewhere in the world originally emigrated from this area. Even during the Cultural Revolution, Western excesses like curled hair and holding hands in public survived in Shanghai. Despite the incomprehensibility of the local Shanghainese dialect to not only Chinese-speaking foreigners, but also to other Chinese, it has always been easier for visitors to communicate with the locals here than anywhere else in the country, because of the excellent level of English spoken and the familiarity with foreigners. The city's relative wealth has also allowed a greater interest in leisure activities and nightlife , with a wide variety of public entertainment on offer as well as new privately run bars. Not only does Shanghai remain the nation's premier industrial base, it is also the major consumer centre, and the variety and quality of goods in the shops attract people from all over China.

Some problems remain, however, and above all Shanghai continues to suffer acute overcrowding . Although the housing stock has soared in recent years, even official statistics give the average inhabitant living space little larger than a double bed, and in practice this often means three generations of a family sleeping in one room. Everywhere you look, there are too many people, and the resultant stress frequently surfaces in outbreaks of bad temper and sometimes public brawling. As a centre of huge oil refineries, chemical and metallurgical plants, Shanghai is also afflicted by air pollution in the form of sulphurous clouds pouring from the factory chimneys. About four million tons of untreated industrial and domestic waste flow daily into the Huangpu River, the city's main source of drinking water, while the Suzhou Creek is black and foul-smelling. Finally, the unemployment rate is noticeably higher than that of other major cities. The problem of outsiders without Shanghai residence papers (and hence without accommodation) pouring into the city under the lure of fantastic riches has the potential to lead to serious social unrest. Today, though nominally closed to internal migration, and despite the one-child policy and three hundred thousand abortions annually, Shanghai continues to grow - to the point where a population of more than thirteen million makes it one of the largest (and most congested) cities in the world.