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A leader in fashion, business and commerce, as the city with the densest population in the world's most populous country, Shanghai also takes the lead in urban development.

With an overall population density of more than 2,800 people per square kilometre, compared with 900 in Beijing and fewer than 400 in Chongqing, Shanghai's central Huangpu district has a whopping 126,500 people per square kilometre; giving each person less than 8 square metres.

So many people living in such a small space places enormous pressures on basic amenities.

To alleviate this pressure and to prevent the problem spreading, planning authorities have been following a strategy of suburbanization moving people out of ageing low-rise buildings in the city centre to newly built suburbs farther out of town.

Early this year, as part of China's 11th Five-Year Guidelines (2006-10), the Shanghai Urban Planning Bureau released a framework "1966 plan" outlining their strategy for the development of the Shanghai Municipality.

The plan defines the 600-square-kilometre area within Shanghai's outer ring road as central Shanghai. Outside the ring road, according to the plan, nine new towns with a combined population of 5.4 million and 60 new small towns with populations of around 50,000 each will be built.

As well as being populated by migrant workers who flock to the municipality, drawn by its economic success, these towns will also be home to Shanghainese displaced from the city centre.

Expansion of the transport network including the metro, roads, railways and maglev will allow people to live away from downtown Shanghai but easily commute into the centre for work.

But while the economic and strategic reasons for this exodus make sense, and hundreds of thousands of families have benefited from improved living conditions as a result of moving, the strategy has not been without controversy.

As historic residential areas of the city have made way for commercial high-rises, whole communities have been displaced, and, some argue, valuable heritage has been lost.

In a crumbling colonial terrace block no more than 100 metres from Shanghai's centrepiece Xintiandi shopping street, Cai Li, her husband and two children share a single room.

Their home resembles a train compartment: A bed folds down from the wall when Cai's son and daughter, both at secondary school, come home for the weekend. The bathroom and kitchen are communal, shared with neighbours who live similarly cramped lives.

It has long been known that the area is slated for demolition, but the family refuses to leave.

"If the demolition goes ahead, we will have to move to suburbs an hour and a half from downtown Shanghai," said Cai, whose job as a house-cleaner relies on her living close to the affluent families who employ her.

"Our new home would be bigger, but if we move, I don't know if I will be able to find work."

Weighing the known benefits of a move to the suburbs against the potential pitfalls of such a change is a problem faced by millions.

Zhu Minyu, a 50-year-old Shanghai native, used to live in the centre of downtown Shanghai in Huaihai Middle Road.

She, her husband and their son shared a 20-square-metre room, communal toilet and kitchen.

In 2004, fed up with the lack of space, they sold it and used the money to cover the down payment on a new 800,000 yuan (US$100,000), five-room, 200-square-metre flat in Pudong's Sanlin District.

"We have a big balcony, and all the rooms are bright and catch the sun," Zhu said. "It's so much better than the old place, but I still miss living in the middle of the city.

"At first I found living here really inconvenient, boring and lonely. It has taken me quite a while to adjust. I used to bump into people I knew all the time on Huaihai Road, but here in Sanlin, the streets are mostly empty.

"If I do go downtown, I can't stay after the buses stop at 10 pm because catching a taxi home is too expensive."

But things are improving as the suburbs develop, more amenities move in. A new shopping mall near Zhu's home opened in May, and by 2009 Sanlin will be just a 15-minute subway ride from downtown.

As for the administration of the strategy, residents who are relocated to make way for private developers are usually provided with replacement homes by the company responsible for the project, and for government projects, such as expansion of the metro, a complex formula is used to calculate lump-sum compensation.

Based on the size of the home a family leaves, payments usually equate to 4,000-8,000 yuan (US$500-1,000) per square metre but can vary widely depending on the location and condition of the property and the negotiating skills of the homeowners.

The government is also responsible for providing a sufficient supply of cheap housing for displaced families to move into.

In suburbs such as Pudong, government-built flats cost 4,500-5,500 yuan (US$563-688) per square metre, which figures out to about 350,000 yuan (US$43,750) for a 70-square-metre, two-bedroom unit.

The system has not been without its problems, however. Some families have had to be forcibly evicted, and in January 2005 an elderly couple were killed by a fire deliberately set to intimidate them into moving.

A deputy general manager and two workers from the Shanghai Urban Development Housing Relocation Co Ltd were found guilty of starting the blaze. The manager and one of the workers received death sentences suspended for two years, and the third man was given a life sentence.

Attempts to interview relevant Shanghai government officials regarding relocation issues were unsuccessful, but it's clear that increasingly residents in the city centre are opting to move to the suburbs as a lifestyle decision.

Information technology consultant Xiang Yu, 35, and his wife struck out for the suburbs two years ago, moving out of the flat they rented in downtown Shanghai.

"I was sick of the crowded streets, tall buildings and high prices downtown," Xiang said. "Out here we have more parks, more plants, more space, better air quality and less noise. I have no complaints at all about suburban life."

A short walk from the terminal stop of Metro Line 1, the Xinzhuang residential area that the couple now call home has developed into a mature community over the past 10 years, replete with shopping centres, post offices, schools and hospitals.

It's a model for what the currently remote suburbs beyond the outer ring road will soon become as the density is reduced, replaced by a type of suburban sprawl.

(China Daily July 3, 2006)