Across the river from this retail mecca, a futuristic vision called Pudong sparkles as the city's new financial district on what was mostly marshland 15 years ago. By 2008, Pudong will boast the world's tallest building, providing Shanghai the superlative exclamation point it craves. This year, the city expects more than $12 billion in contracted foreign direct investment, nearly 40 times that of 1985. More foreigners now visit Shanghai than in the city's first heyday. Some travel from the new airport on what is perhaps the city's finest metaphor: a $1.2 billion magnetic-levitation train that reaches 430 kilometers per hour, making it the world's fastest locomotive—even though the entire trip takes only eight minutes. "I've lived all over Asia, and no place has the kind of energy that Shanghai does," says Rudi Butt, the Hong Kong-born executive director of the Yongfoo Elite, a private dining club in the historic French Concession, where a corporate membership costs $7,000. "Just walking down the street, you feel like people are picking up their pace and making everything go faster and faster."

But beyond fashioning itself into the world's greatest boomtown, Shanghai has made itself the symbol of our era. No metropolis better captures the striving spirit of the times—globalization, trade, pell-mell development—than Shanghai. This city of 16.7 million people, built on the mud flats of the Yangtze River, is constantly expanding its horizons, transforming itself into the modern realization of the East-meets-West dream. It is a dizzying spectacle that inspires awe and envy, wonder and bewilderment. This weekend China's first Formula One Grand Prix will take place on a circuit that used the country's entire annual supply of polystyrene to keep the track from sinking into a swamp. Three weeks later, the National Basketball Association will bring back Shanghai's native son, Yao Ming, for a preseason game between the Houston Rockets and the Sacramento Kings. In hopes of purchasing a ticket, thousands of Shanghainese stood in line for 40 hours.

There's more. A Spanish bullfight is planned for next month in a specially constructed ring in the Shanghai Sports Stadium. Starting on Sept. 29, the Shanghai Art Museum will showcase what in just a decade has become one of Asia's premier art festivals, the two-month Shanghai Biennale. "The Shanghainese are quick to adopt foreign and new ideas," says Zhang Qing, one of the curators of the Biennale, which will focus on the symbiosis among art, science and technology. "The city has an accommodating character, so even though Shanghai might not have the best Chinese artists, it provides a platform for international artistic exchange."

This renaissance has been spectacularly rapid. When Handel Lee first visited Shanghai in the early '90s, the 43-year-old American lawyer saw nothing of the city that his father, who studied in Shanghai before joining the overseas exodus in 1949, used to rhapsodize about as the most cosmopolitan place in the world. "I hated it," says Lee, who was based in Beijing at the time. "It was dirty and muddy, and the people were grouchy. I thought 'How could this place have been so glamorous before?'" That the Pearl of the Orient had lost its luster was unsurprising, given that the Communists had deliberately held Shanghai back as retribution for its earlier capitalist excesses. Even when Deng Xiaoping kick-started economic reforms in 1979, Shanghai wasn't invited to the party. It was only in the mid '90s, after Deng had repented on his decision to restrain Shanghai, that then President Jiang Zemin, a former Shanghai Mayor, was able to grant his old domain the same economic freedoms as other parts of China. "I remember visiting in 1998," says Lee, "and all of a sudden, it felt like Shanghai was breathing a huge sigh of relief and saying, 'Hey, we're back where we belong.'"

Like everyone else, Lee began looking for a way to ride the revival. By 1999, he had found it: a dilapidated building on the historic Bund riverfront that, with investment from Chinese tire magnates living overseas, he hoped to turn into the city's premier address. Renovations took nearly five years—an eternity in today's Shanghai—but earlier this year, Three on the Bund opened for business. Transformed by American architect Michael Graves, the 1916 building includes four restaurants, the 1,000-square-meter Armani flagship store and an Evian spa. Despite the stratospheric prices—a ruched scarf at one of the apparel stores goes for $300—half of the building's customers are Chinese. At the Evian spa, women who once were exhorted to trade "lipstick for guns" sashay past indoor streams (filled with Evian mineral water) to private treatment rooms, while on a different floor the famed fusion chef Jean-Georges Vongerichten offers up such delicacies as a $33 coddled egg with crème fraîche and caviar to executives from state-owned enterprises.

One floor of Three on the Bund is reserved for the Shanghai Gallery of Art, Lee's pet project. Previously, much of Chinese top-end avant-garde art was produced by artists who lived overseas and sold their work to foreigners enchanted by neon-hued renditions of Chairman Mao. Some Chinese artists did live on the mainland, often in communes outside Beijing, but their art, too, was largely bought by a clique of expats. Local art collectors seemed to prefer traditional landscapes over these more challenging pieces. But Lee figured he could convince Shanghai's more open-minded residents to take an interest in modern Chinese art. "Shanghai is a window to the world because Shanghainese have an intense desire to learn about the West," Lee says. "But in a strange way, Shanghai is also a window into a China that many other Chinese are unwilling to imagine." In less than a year, the gallery has sold more than $1 million in contemporary Chinese art to local collectors. "This is the city where trends begin," says Lee, who is now working on bringing a boutique hotel to Shanghai. "We're sitting on an incredible force that's just beginning to come alive."

Every party town has its own beat, and in 1930s Shanghai the city's heart syncopated to the sound of jazz. The coolest music emanated from the Paramount, host to global jet-setters like Charlie Chaplin and Douglas Fairbanks. But the parties at Alphonso Zhu's house, a Spanish mission-style mansion with two tennis courts and an oversized ballroom, were also the talk of the town. Between waltzes, guests feasted on lobster, drank champagne punch and gossiped in English, Chinese and French. Alphonso's father had studied at the Sorbonne, and the son would have gone to Paris, too—the "Shanghai of the West," as the joke went—had hostilities with Japan not intervened.



But even the Japanese occupation of the international settlements from 1941 to 1945 didn't wreck the party. Sure, the ranks of Westerners thinned—one of Alphonso's favorite dancing girls at the Paramount, a Russian named Nina, nearly died in the internment camps—but Europeans from neutral or Axis nations still bobbed their heads among the Chinese fox-trotting set. Then China's "liberation," as the Communists dubbed their victory over the Nationalists in 1949, changed everything. When the red-cheeked peasants of the People's Liberation Army marched into town, they were appalled by Shanghai's depravity. Private businesses were nationalized, and the Zhu home was claimed as the headquarters of one of the Communists' propaganda bureaus.

By 1952, Zhu was toiling as a lowly purchaser in the power company his family had once owned. One day, local officials organized a day off for the laborers. Entertainment came courtesy of a dire 40-piece People's Liberation Army orchestra. Desperate to stop the screeching cacophony, the head of the work unit directed Zhu to a dusty piano. The song he chose? Tea for Two. Even the local Party secretary was charmed, and soon after, Zhu was commissioned to play a concert to celebrate Asian-Latin American-African Friendship Day. Zhu remembers that he ended his medley with a Latin-tinged number that went: "Mexicali Rose, stop crying. I'll come back to you some sunny day." Hundreds of peasants, in their baggy uniforms, shimmied to the foreign imperialists' music while the Shanghainese dusted off their rumbas. Zhu recalls: "My piano made Shanghai sunny again."

The interlude didn't last. A Party magazine criticized Zhu's concert for destroying revolutionary spirit. Soon after, in 1966, the Cultural Revolution began in earnest. Red Guards ransacked Zhu's home, destroying all his instruments and burning family photos. One album, though, was saved for a public display detailing how decadently Shanghai's élite had lived. Thousands of Red Guards marched past the exhibit, spitting on the floor to show disgust at such opulence. Zhu was forced to walk through, too, keeping his head downcast so the others wouldn't recognize the pomaded boy strumming a guitar in happier days. Later, Zhu spent 14 months in solitary confinement. On the paper he was supposed to use to write out his confessions, he scribbled the sheet music to his favorite songs.

Today, Zhu and his wife live in a one-room apartment in a fourth-floor walk-up. Most of his family is scattered across Europe, Latin America and the U.S.—a diaspora typical of Shanghai's venerable old families. But Alphonso never considered leaving. Last week, he joined a group of Shanghainese who had gathered to sing the jazzy hits he was once imprisoned for loving. "Who would ever have imagined," Zhu marvels, "that we'd hear these songs in Shanghai again?"