For Shen, it's all good news. Shanghai has been a centre of Chinese business and culture since it became a British port more than a century ago. But amid the tumult of commerce, Beijing took the lead in promoting the arts. Shanghai's Eastlink Gallery director Li Liang says the capital now 'has 10 times as many artists'.

Shanghai is trying hard to shake its reputation as a city of bankers and traders. Besides building the Duolun, the ministry of culture has taken a relaxed attitude towards exhibitions. Officials have attended each of the 12 shows the Duolun has so far hosted, but they haven't interfered with the art Shen chose to include. 'The government doesn't understand what art has value,' Shen says. 'They accept that we're the professionals.'

The thaw has allowed the Duolun to exhibit cutting-edge works. Its first show, Open Sky, featured works by 36 artists. These included 31-year-old Shanghai artist Xiang Liqing's installation Highlight, a small clay man crawling below a stack of 19 massive floodlights. Chinese-born Australian sculptor Shen Shaomin's Unknown Creature series combines animal parts - the proboscis of a mosquito, the body of a fish and chicken claws - to create a feeling of a world gone haywire. 'He's saying that cloning technology is changing too fast,' says Duolun curator Gu Zhenqing.

With three floors and 2,000 square metres of exhibition space, the Duolun is also well suited to showing video and performance pieces. Early this year. Beijing performance artist He Chengyao executed Body, in which he wrapped white duct tape around his naked torso. Shen says it examines 'the limits and difficulties of living'. He'd never before been allowed to perform the work in public.

For Shanghai, such artistic freedom is a step in the right direction. The city government has set 2010, when it will hold the World Expo, as the target for completing its cultural makeover. This includes plans to build about 100 new museums, and the government is in talks with New York's Guggenheim Museum and Japan's Mori Museum to establish arts centres. It has also spent millions of dollars on the recently completed Shanghai Grand Theatre, the Shanghai Museum and the Shanghai Art Museum. 'Officials say that London has 100 museums,' curator Gu says. 'So, here they also want 100.'

But for the plan to work, technocrats will have to find a way to make art relevant to locals. That won't be easy. When the government proposed building the Duolun, Shen says, it 'had no idea of how to do it'. He helped by bringing dozens of artists and curators to brief officials. The architectural result is impressive. At the centre of the gray-tile building an opening rises seven floors to a dome skylight. At the rear, abutting large gallery spaces, a glass atrium provides natural light. A small bookstore downstairs sells Chinese and foreign art journals and books.

Attention to layout has helped the Duolun maintain a steady stream of several hundred visitors a day since it opened, and local schools have arranged to bring six elementary classes through daily. Such exposure will help create a new generation of Chinese who understand and appreciate art. 'If art isn't public, we lose the opportunity to have it matter,' Shen says.

The Duolun isn't the only space helping Shanghainese and Chinese artists make names for themselves. The 1,800-square-metre Art Scene Warehouse gallery, in a former fabrics factory in the city's north, shows month-long exhibitions by local and foreign artists. For Cohesion, which runs until the middle of this month, the gallery has brought together works by 16 Chinese, Korean and German artists that, according to the show catalogue, fight back against art that is too 'comfortable, clean, smooth and understanding.' One piece, a bronze statue of a boot with a giant platform sole, seems a perfect antidote to the soft and simple works that adorn most of Shanghai's tourist hotel lobbies and business centres.

'Shanghainese are making a lot of money,' says Sun Jianwei, a 47-year-old painter who creates Salvador Dali-esque works in a studio at the converted factory. 'But our culture is atrophied. Now we need to focus on building it.'

Several upcoming shows at the Duolun will highlight Shanghai-nese artists. In October, the museum will host That's Shanghai, a collection of 30 artists' works that Shen says are based 'on the connections between design and contemporary art'. From today until August 31, an exhibition called Shanghai New Artists will show installation, video and performance works by four locals. One, 27-year- old Zhang Qing, recently finished a performance piece for which he hired 10 taxis and had them drive back and forth at each other in a kind of modern samba dance. Another, Tang Maohong, will create synthetic corridors that open and close, 'to make visitors aware of how space influences them'.

The lesson that we're shaped by our environment is one that both Shen and the Shanghai government understand. Like most of China, Shen says, Shanghai is experiencing rapid change and art can offer an important venue to reflect on the growing pains of modernisation and urbanisation.

To help that self-critique, he's been trying to attract more visitors. A series of high-profile guests, from the prime minister of Slovenia to the lieutenant governor of Hawaii, have visited the museum. But Shen is happiest when people such as Mao Neng and Liu Min, a local couple, come through.

Mao, an engineer with a passion for photography, says he likes a series of digitally reworked photographs of dinosaurs romping through cathedrals, and scenic landscapes by Wang Huiqing and Tomaz Lunder.

Liu says she's intrigued by a video work by American Mathieu Borysevicz called Crime and Punishment: two projectors show images from Chinese magazine China Big Case, which, the artist writes, 'sensationalises violent crime and its subsequent punishment.' Liu says she's not quite sure what to make of the work, but finds the images captivating. And that, says Gu, is a good start. 'Shanghai,' he says, 'must find its own cultural identity.'