After the war, Shanghai's economy was restored—from 1949 to 1952, the city's agricultural and industrial output increased by 51.5% and 94.2%, respectively.[38] There were 20 urban districts and 10 suburbs at the time.[59] On 17 January 1958, Jiading, Baoshan, and Shanghai County in Jiangsu became part of Shanghai Municipality, which expanded to 863 km2 (333.2 sq mi). The following December, the land area of Shanghai was further expanded to 5,910 km2 (2,281.9 sq mi) after more surrounding suburban areas in Jiangsu were added: Chongming, Jinshan, Qingpu, Fengxian, Chuansha, and Nanhui.[60] In 1964, the city's administrative divisions were rearranged to 10 urban districts and 10 counties.[59]

As the industrial center of China with the most skilled industrial workers, Shanghai became a center for radical leftism during the 1950s and 1960s. The radical leftist Jiang Qing and her three allies, together the Gang of Four, were based in the city.[61] During the Cultural Revolution (1966–1976), Shanghai's society was severely damaged, with 310,000 wrongful convictions involving more than 1 million people. About 11,500 people were unjustly persecuted to death. Yet, even during the most tumultuous times of the revolution, Shanghai was able to maintain economic production with positive annual growth rate.[38]

Since 1949, Shanghai has been a comparatively heavy contributor of tax revenue to the central government; in 1983, the city's contribution in tax revenue was greater than investment received in the past 33 years combined.[62] Its importance to the fiscal well-being of the central government also denied it from economic liberalizations begun in 1978. In 1990, Deng Xiaoping finally permitted Shanghai to initiate economic reforms, which reintroduced foreign capital to the city and developed the Pudong district, resulting in the birth of Lujiazui.[63] As of 2020, Shanghai is classified as an Alpha+ city by the Globalization and World Cities Research Network, making it one of the world's Top 10 major cities.[64]