The town of Shanghai was first founded in the 11th century as a small fishing village near the mouth of the Yangtse River, and so it remained for centuries after. In the 18th century, Shanghai grew and became important as the center of a cotton-growing area, but it was only in 1842 that it began its rise to become the greatest city of China.

When the Opium War was over, Britain forced the Chinese to open up a number of towns along the coast to foreign trade - the so-called Treaty Ports. Premier amongst them was Shanghai. The main portions of the city as it grew were divided into the International Settlement, run basically by the British, and the French Concession, and for many decades, they were ruled entirely by the foreigners who even enjoyed "extra-territoriality" -- freedom from prosecution under Chinese law.

This foreign domination of a piece of Chinese soil met growing resistance from ordinary Chinese, one manifestation of which was the establishment of the Chinese Communist Party, which held its first National Congress in secret in a house in the French Concession in 1921. In 1927, the Nationalists led by Generalissimo Chiang Kai-shek and the Communists co-operated to take the city and placed the Chinese parts of it under Nationalist (Kuomintang) control.

In 1937, Shanghai was occupied by the Japanese, and when Japan was defeated in 1945, the western powers handed Shanghai over to the Nationalist Chinese government. The foreign domination of Shanghai was over. Towards the end of the civil war, in May 1949, the People's Liberation Army marched into Shanghai.

The old pre-communist Shanghai was really several worlds - flanked by the glitter and wealth of the upper crust, and the grinding poverty of the lower classes. Many of the foreign Shanghailanders lived like royalty, as their sumptuous mansions, still standing, attest. As a result, the architectural heritage of Shanghai is unrivalled in its richness and variety. Many of the old buildings are now being torn down as Shanghai develops, but an excellent record of them can be found in the book A Last Look, by Tess Johnston and Deke Erh.

At the other of the scale, life was cheap. In 1937, the authorities in the International Settlement collected from its streets the bodies of 20,000 people who had died there of hunger and cold. In some textile mills, children were chained to their machines. Prostitution was a major industry. The science fiction writer, J.G. Ballard, who grew up in old Shanghai, recalled going to the opening night of the film The Hunchback of Notre Dame, and finding hundreds of hunchbacks outside the cinema, employed by the film's promoters to add atmosphere. There were gangland bosses such as Du Yuesheng, leader of the notorious Green Gang, who made millions out of opium, gambling, prostitution and extortion, and covered himself by establishing close ties with the Nationalist leaders and the police chief of the French Concession. There was a small but significant Chinese bourg! eouisi e. And below, there were the poor, the ordinary people, struggling to get by.

With the Communist victory in 1949, the city at one stroke was transformed. Opium dens were closed and the addicts weaned from their habit; the prostitutes were given medical treatment and taught new trades. The worst of the slums were slowly cleared away. During the Korean War early 1950s, many of Shanghai's factories were moved to the interior to protect them from the possibility of attack. The foreigners left, the factories and businesses were gradually nationalised.

Shanghai was much affected by the leftist Cultural Revolution (1966-1976), but with the return to power of Deng Xiaoping in 1978, and the open-door policy that he championed, Shanghai began the Long March back to being an international finance and business centre. The pace of development and reform in the city speeded up dramatically in 1991.

See our section on Tales of Old Shanghai for more information on Shanghai's past.