The only large port of central China not cut off from the interior by mountains, it is the natural seaward outlet of, and the gateway to, the Chang basin, one of China's richest regions. It handles much of the country's foreign shipping and a large coastal trade. Great sums are expended to keep open its continually silting harbor. A submarine base is in the harbor. A new deepwater port, Yangshan, located on islands 17 mi (27.5 km) SE of Shanghai in the South China Sea, opened in 2005; the port is connected to the mainland by the 20.2-mi (32.5-km) Donghai Bridge. Although water transport is of prime importance, highways radiate outward, and there are rail connections with Nanjing and Hangzhou, with links through those cities to the N and S China networks. A new international airport opened in Pudong (East Shanghai) in 1999.

Despite a lack of fuel and raw materials, Shanghai is China's leading industrial city, with large steelworks; textile mills; shipbuilding yards; oil-refining, gas-extracting, and diamond-processing operations; and plants making light and heavy machinery, electrical, electronic, and computer equipment, machine tools, turbines, chemicals, pharmaceuticals, aircraft, tractors, motor vehicles, plastics, and consumer goods. The city also is a major financial and publishing center, and is a regional headquarters for many multinational companies. Shanghai includes much of the surrounding rural area (over 2,000 sq mi/5,000 sq km); there farms produce the food crops that support the city's population.

In the 1970s and 80s, Shanghai's industrial base was shifted to include more light industries in order to reduce pollution. There was much rebuilding and expansion; new factories emerged around the outskirts of the city, and the northwest section was developed as an industrial district. Development in the 1990s concentrated on Pudong, an area formerly dominated by farms and marshland that was designated a special economic development zone. A project to divert much-needed water for the city from the Chang River into the Huangpu was completed in 1996. The 1990s also brought new bridges and tunnels and a subway system.

The city's commercial section, the former International Settlement, is modern and Western in appearance, with broad streets and boulevards lined with imposing buildings. The Bund (which runs along the waterfront), Nanjing Road, and Bubbling Well Road are the most noted thoroughfares. Typical Asian buildings are found only in the original Chinese town (no longer walled), known as Nanshi. The Oriental Pearl Television Tower (1,535 ft/468 m high), the 88-story Jin Mao building, and the butterfly-orchid-shaped Oriental Arts Center with its four performance halls are in Pudong.

Next to Beijing, Shanghai is the country's foremost educational center and is home to Fudan Univ., Jiaotong Univ., Shanghai Univ. of Science and Technology, Tongji Univ., three medical colleges, and numerous technological and scientific institutes. Shanghai has an astronomical observatory and many research institutes and learned societies. People's Square, refurbished in the late 1990s, is the site of an opera house and a museum containing the country's finest collection of Chinese art (both 1996).

The name Shanghai dates from the Sung dynasty (11th cent.), but the town, which became a walled city in the 16th cent., was unimportant until it was opened to foreign trade by the Treaty of Nanjing in 1842. The ensuing Western influence launched the city on its phenomenal growth. The greater part of the city was incorporated into the British concession (1843), just north of the old walled city, and into the U.S. concession of Hongkew (1862). In 1863 the United States and Great Britain consolidated into the International Settlement the areas that had been conceded to them. The French, who had obtained a concession in 1849, continued it as a separate entity. The foreign zones, which were under extraterritorial administration, maintained their own courts, police system, and armed forces. Thus Shanghai until World War II was a divided city.

In 1927, Chiang Kai-shek, at the head of the Nationalist army and with the support of the Chinese Communists, captured Shanghai. The Chinese section was immediately placed under the Kuomintang government. Japan invaded and attacked the Chinese city in 1932 to force the government to break an unofficial boycott of Japanese goods. In Aug., 1937, as part of the Second Sino-Japanese War, the Japanese again attacked the Chinese city, and resistance was overcome in November. The foreign zones were occupied by the Japanese after Dec. 7, 1941.

In 1943 the United States and Great Britain renounced their claims in Shanghai, as did France in 1946. The city was restored to China at the end of World War II, and the Chinese central government for the first time gained control of the entire city. In May, 1949, it fell to the Communist forces. Since Pudong (East Shanghai) was declared (1990) a special development zone, government and foreign investment has revived Shanghai as an international trade and financial center.