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An upstart by Chinese standards, Shanghai—unlike imperial Beijing—was just a modest fishing town a century and a half ago. The city was born with a sense of manifest destiny. In the beginning it was a foreign dream, a Western treaty port trading opium for tea and silk. The muscular buildings along the riverfront known as the Bund (a word derived from Hindi) pro­jected foreign, not Chinese, power. From around the world came waves of immigrants, creating an exotic stew of British bankers and Russian dancing girls, American missionaries and French socialites, Jewish refugees and turbaned Sikh security guards.

By the 1930s Shanghai was among the ten largest cities in the world. But it was like no other place on Earth: a mixed-blood metropolis with a reputation for easy money—and easier morals. The British, French, and Americans carved the city into concessions, building gracious homes along tree-lined streets. Local shops carried the latest fashions and luxuries. The racecourse dominated the center of town, while the city's nightlife offered everything from dance halls and social clubs to opium dens and brothels. (At one time, Shanghai reputedly had more prostitutes than any other city in the world.)

The whole enterprise, however, rested on the several million Chinese immigrants who flooded the city, many of them refugees and reformers fleeing violent campaigns in the countryside, beginning in the mid-1800s with the bloody Taiping Rebellion. The new arrivals found protection in Shanghai and set to work as merchants and middlemen, coolies and gangsters. For all the hardships, these migrants forged the country's first modern urban identity, leaving behind an inland empire that was still deeply agrarian. Family traditions may have remained Confucian, but the dress was Western and the system unabashedly capitalist, and the favorite soup, borscht, came from Russians escaping the Bolsheviks. "We've always been accused of worshipping foreigners," says Shen Hongfei, one of Shanghai's leading cultural critics. "But taking foreign ideas and making them our own made us the most advanced place in China."

The curtain finally came down in 1949. For the next four decades China's socialist overlords made Shanghai suffer for its role as a modern-day Babylon. Besides compelling the economic elite to leave and suppressing the local dialect, Beijing siphoned off almost all the city's revenues. When China's economic reforms began in the 1980s, Shanghai had to wait nearly a decade before the regime in Beijing allowed it to develop. "We kept wondering, When is it going to be our turn?" says Huang Mengqi, a fashion designer and entrepreneur who owns a shop off the Bund.

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