Shanghai, the most notorious of Chinese cities, once known as the Paris of the East, now calls itself the Pearl of the Orient. No other city can better capture the urgency and excitement of China’s economic reform, understandably because Shanghai is at the center of it.

A port city, lying at the mouth of Asia’s longest and most important river, Shanghai is famous as a place where internationalism has thrived. Opened to the world as a treaty port in 1842, Shanghai for decades was not one city but a divided territory. The British, French, and Americans each claimed their own concessions, neighborhoods where their laws and culture — rather than China’s — were the rule.

By the 1920s and ’30s, Shanghai was a place of sepia-lighted nightclubs, French villas, and opium dens. Here rich taipans walked the same streets as gamblers, prostitutes, and beggars, and Jews fleeing persecution in Russia lived alongside Chinese intellectuals and revolutionaries.

But now Shanghai draws more parallels to New York City than Paris. A true city, it is laid out on a grid (unlike sprawling Beijing), and with a population of 16 million, it is one of the world’s most crowded urban areas. The Shanghainese have a reputation for being sharp, open-minded, glamorous, sophisticated, and business-oriented, and they’re convinced they have the motivation and attitude to achieve their place as China’s powerhouse. Far away from Beijing’s watchful political eyes, yet supported by state officials who call Shanghai their hometown, the people have a freedom to grow that their counterparts in the capital don’t enjoy. That ambition can be witnessed firsthand across Shanghai’s Huangpu River, which joins the Yangzi at the northern outskirts of the city. Here lies Shanghai’s most important building project — Pudong New Area, China’s 21st-century financial, economic, and commercial center. Pudong, literally “the east side of the river,” is home to Shanghai’s stock market building, the tallest hotel in the world, the city’s international airport, and the world’s first commercial “mag lev” (magnetic levitation) train. Rising from land that just a few years ago was dominated by farm fields is the city’s pride and joy, the Oriental Pearl Tower — a gaudy, flashing, spaceship-like pillar, the tallest in Asia. As Shanghai prepares to host the 2010 World Expo, Pudong is again immersed in a decade-long round of construction.

Puxi, the west side of the river and the city center, has also gone through staggering change. Charming old houses are making way for shiny high-rises. The population is moving from alley housing in the city center to spanking-new apartments in the suburbs. Architecturally spectacular museums and theaters are catching the world’s attention. Malls are popping up on every corner. In 1987 there were about 150 high-rise buildings in the city. Today there are more than 3,000, and the number continues to grow. Shanghai is reputed to be home to one-fifth of all the world’s construction cranes.

Shanghai’s open policy has also made the city a magnet for foreign investors. As millions of dollars pour in, especially to Pudong, Shanghai has again become home to tens of thousands of expatriates. Foreign influence has made today’s Shanghai a consumer heaven. Domestic stores rub shoulders with the boutiques of Louis Vuitton, Christian Dior, and Ralph Lauren. Newly made businessmen battle rush-hour traffic in their Mercedes and Lexus cars. Young people keep the city up until the wee hours as they dance the night away in clubs blasting techno music. And everyone walks around with a cell phone. It’s not surprising that the Shanghainese enjoy one of the highest living standards in China. Higher salaries and higher buildings, more business and more entertainment — they all define the fast-paced lives of China’s most cosmopolitan and open people.