The Yangtze River basin - an area of low-lying land that runs west from Nanjing , in eastern Jiangsu province , through southern Anhui and northern Jiangxi , and finally into Hubei , at the heart of China - forms a natural development corridor from Shanghai's seaport into the hinterland.

The river port city of Nanjing lagged behind Jiangsu's coastal cities during the 1990s. But China's ancient southern capital is finally beginning to reassert some traditional muscle: the city's gross domestic product surged more than 15 per cent in the past two years, and its residents now rank just behind Beijing's in terms of personal wealth.

As the gateway to the Yangtze River Delta, Nanjing falls within Shanghai's economic orbit and is well placed to service the roaring economies downstream. The city benefits from a trend among manufacturers, increasingly unwilling to pay Shanghai's high land and labour costs, to move business further inland. In 2004, the city received almost US$15 billion of inward investment, including a healthy US$2 billion from overseas.

Bjorn Bostrom, president of Ericsson's Nanjing-based Asia Pacific supply centre, says there are considerable advantages of being upriver from the 'overheated' cities nearer the coast. Apart from the exorbitant cost of manufacturing in Shanghai: 'You don't have access to the labour there.'

Nanjing has one of China's highest per capita tertiary education rates, yet doesn't suffer from the constant personnel turnover - and therefore high retraining costs - endemic in Shanghai's labour market. 'In terms of dedication, loyalty and eagerness to learn, I find our workforce here better for most tasks than in Europe,' says Mr Bostrom. 'I cannot see any advantages in the Suzhou-Shanghai area.'

A new expressway has cut the travel time to Hangzhou to three hours, while Shanghai is just 90 minutes away on a new high-speed passenger rail link. With three bridges spanning the Yangtze and a new metro system covering much of the city, Nanjing boasts one of China's most complete transport infrastructures.

Upriver, the picture is more mixed. Anhui and Jiangxi remain the two poorest provinces in central China, with GDP per head at levels commonly associated with the backward provinces of the country's mountainous, isolated west. Even residents of Hefei , Anhui's capital, barely scrape together more than US$1,500 per year.

Local officials speak optimistically about Anhui's potential as a cheap manufacturing and labour base for the booming economy just 100km across the provincial border. They hope the province's river ports will become 'mini-dragonheads' within the region.

'The towns on the Yangtze, like the cities on the coast, will develop,' says Sun Yongbin, an official in the foreign trade department. 'The problem, in Anhui and over the country, is places without access to water transport.'

The most interesting of Anhui's river towns is Wuhu . Unlike neighbouring towns that rely on single heavy industries, such as Maanshan (steel) and Tongling (copper), Wuhu is home to a variety of local, domestic and foreign enterprises. Chery Auto, maker of the popular but controversial QQ mini-car, has its headquarters in the town's economic development zone, where Hitachi also operates a large export processing centre.

Wuhu's busy port, which handled 32.5 million tonnes of cargo and 60,000 standard containers in 2004, is also an important export conduit for a growing number of textiles and household-appliance makers, such as Guangzhou's Midea. A new series of mini-canals between Wuhu and Shanghai will soon lop 110km off the 400km distance to Shanghai's seaport.

Hefei, two hours from Nanjing by road and connected to Wuhu by rail and expressway, is the most important economic centre in Anhui, but ranks as one of China's poorest and most rundown provincial capitals. The kind of feverish development commonly seen in major cities across China seems to have passed Hefei by.

One of Hefei's chief problems is a lack of private enterprise. Local officials believe state-owned enterprises account for about 80 per cent of the city's GDP. Hefei's biggest state-owned enterprise, JAC Automotive - known for its trucks and minivans - employs 14,000 people in the city and accounts for about 10 per cent of local GDP. Despite attempts at restructuring, JAC remains a state enterprise of the old school, complete with its own hospital and huge apartment blocks for its workers.

Huatai Group, which makes China's most popular brand of packaged sunflower and watermelon seeds, Qia Qia, bucks the trend. Founded in 1995, the local private company now has a yearly turnover of 1 billion yuan, exports all over the world, and co-operates with US and Israeli firms on seed research and technology.

Several hours upriver, Anhui gives way to Jiujiang , Jiangxi province's chief river port and one of central China's major transport hubs. The town, named after the nine rivers that flow through it, is a key junction on the Beijing-to-Kowloon railway, which crosses the Yangtze via a fine wrought iron bridge. Well-established expressways run west to Wuhan and south to Nanchang , the provincial capital.

Jiujiang is poor, with an average GDP per head below US$1,000. The town suffered catastrophic flooding in 1998, and last November an earthquake left half a million local farmers homeless.

But a sudden increase in container shipping since 2003 suggests that the Yangtze may once again become a source of local prosperity.

Last year, Jiujiang port handled about 50,000 containers, more than double 2004's total, and imports and exports have more than trebled since 2002. Local goods, including nearby Jingdezhen's famous porcelain, are exported to Japan, Southeast Asia and Europe via Shanghai's seaport. Residents say that development in the town picked up in 2003, and Jiujiang now enjoys pockets of prosperity, with significant investment in retail and property.

Much of this container traffic originates in Nanchang, two hours south by road or rail. A bleak centre of heavy industry, and depressing even by the ugly, utilitarian standards of many Chinese cities, Nanchang has several development zones that show signs of local private enterprise, mainly in textiles, packaging and pharmaceuticals.

Locals swear the city has been transformed in the past two or three years. On the outskirts of the city, in what was once countryside, landless urban farmers are moving out of grim concrete tenements and squat houses into new, subsidised accommodation. Two years ago, the city government began granting urban hukou - residency permits - to 'rural' residents who had lived in the city for more than two years.

An average flat costs about 120,000 yuan. Mr Li, a local businessman turned taxi driver, says this is perfectly affordable: 'Farmers here used to be very poor, but now they're rather comfortable.'

A few hours northwest of Nanchang is Wuhan, capital of Hubei province. A huge, sprawling beast of a city, Wuhan is a conglomeration of three separate towns organised around the confluence of the Yangtze and Han rivers. Set at the very centre of China, the city marks the intersection of the Beijing-Zhuhai and the Shanghai-Chongqing expressways, and is the biggest river port in the middle reaches of the Yangtze.

With its history as one of the great treaty ports and its magnificent waterfront bund, there are obvious comparisons with Shanghai. A recent book argues that Chongqing is set to become the 'Chicago of China' - but Wuhan will certainly give its Yangtze competitor a run for its money.

About 90 per cent of Wuhan's foreign imports and exports - dominated by the car, electronics and petrochemicals industries - are shipped along the Yangtze. Foreign trade was worth US$6.7 billion in 2004.

A few years ago, many products for export were transported by rail to Hong Kong, but this has dried up as shipping volumes along the Yangtze have grown. Boats and barges that used to stop at a number of ports between Wuhan and Shanghai to top up loads now dock only at Wuhan and sail straight to Shanghai.

A host of expensive bars and cafes occupying the old colonial buildings along Wuhan's Shanghai-style waterfront lend the city an air of commercial sophistication.

But behind the gloss lies the usual problem in China: a paucity of profits. Willy Zhang, a manager at Swedish packaging firm SCA's Wuhan base admits: 'Profit is zero. We have never made a profit in six years - and I suspect that is true of most foreign enterprises in Wuhan.' The problem, he says, is a lack of big foreign companies that can afford to buy SCA's high-quality corrugated boxes.

'Starting a business in Wuhan is different from starting one in Shanghai,' he says.

'Foreign investors need to understand it will take 10 years to make a profit here, not three.'