Shanghai's population has soared beyond the 20m mark in the past year as more than three million new job seekers have flocked to the city in the vanguard of China's spectacular economic surge.

The staggering shift from the countryside to the wealthy urban centre is being replicated around the country, which is undergoing one of the greatest demographic shifts in history.

Out of Shanghai's population, only 13.5 million people are considered permanent residents, said a city government spokesman. Most of the rest are members of China's vast floating population.

The city, which is now seen as the business capital of China, is drawing millions of peasant labourers to its vast construction boom and high wages. The average annual income in the city is about ￡2,900 - many times the national figure.

The millions of rural, migrant workers in Shanghai are lucky to get even a fifth of that sum, but this is still far higher than the income in their home villages where many people live on less than the equivalent of 60p a day.

Shanghai's growth appears to be only the start of things to come. China's government is promoting rapid urbanisation as a means to improve living standards and productivity.

Over the next few years, the world's most populous nation plans to move about 300 million people from the countryside to urban areas.

The policy is creating mega-cities full of skyscrapers and construction sites. Few people outside China will have heard of Chongqing, far upstream from Shanghai on the Yangtze, but - after extending its boundaries - it now claims to be the world's biggest municipality, with 31 million people.

At least three other urban centres - Beijing, Guangzhou and Tianjin - have populations of more than 10 million, bigger than London even without counting the vast army of unregistered residents that live in every city. The pressure on space and resources is becoming increasingly apparent. Shanghai's traffic is growing at a rate of 25% a year and housing prices are soaring.

Earlier this year, the municipal government announced that land was subsiding at a rate of 2.5cm a year because so many new tower blocks were being built and so much water was being pumped from underground to quench the thirst of a growing population.

This summer, a pedestrian tunnel caved in, causing an eight-storey building to collapse, and raising concerns about the thousands of skyscrapers. Most, including China's tallest building, the 88-storey Jinmao, have been built in the past decade.

In the latest sign that Shanghai is struggling to cope with the demographic shift, the municipal authorities ordered many factories to move to night shifts from this week because energy supplies were unable to meet the soaring daytime demand for electricity. Individuals and private companies have been urged to conserve power, but the rapidly expanding population suggests that reining in energy consumption could prove difficult.

Shanghai is spearheading a formidable if unbalanced surge in China's economy that will see it replace Britain as the world's fourth largest economy in the next two years.

With 20 million people, the city still accounts for only about 1.6% of China's total population, but it attracts 10% of foreign investment and generates as much as 5% of gross domestic product.

Its primary economic activity is based on diversified industrial production, but the city also boasts a port, burgeoning financial markets and a hi-tech sector.

World top 10

Shanghai's recent boom is shown by these figures for 2001 (in millions)

Tokyo 26.4

Mexico City 18.1

S?o Paulo 18.0

New York 16.7

Mumbai 16.1

Los Angeles 13.2

Calcutta 13.1

Shanghai 12.9

Dhaka 12.5

New Delhi 12.4

· Source: A UN population division report, World Urbanisation Prospects: The 2001 Revision

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