Residents in Maogang, a town in the city's Songjiang District, will have both gains and pains as the area becomes more connected with world trade.

Paying close attention to China's efforts to be the world's biggest shipbuilding nation, residents in the town are looking forward to prosperity dependent on foreign funds and technology to be introduced for a yacht manufacturing base the town plans to build.

Yachts, especially luxury models, are expected to be mainly ordered by overseas clients for a significant amount of time.

Xu Ting, deputy head of the town, said about US$180 million will be injected into the project in its first phase.

A US$29.9 million venture is part of the first-phase investment and has been approved as a "take-off'' project, according to Xu.

The town, which has benefited from private economic development over the past decade, will have "an unexpected economic boom in the next several years if the yacht project goes smoothly,'' he said.

The official said the yacht manufacturing base will enjoy considerable backing, but the final investment will depend on the project's progress.

The undertaking is being launched by five different foreign yacht manufacturers which have visited the town located along the upper reaches of the Pudong River.

The project will cover an area of 133 hectares and is designed to have five assembly lines with the first expected to be installed in 2005. The line will be able to produce 3,000 yachts annually with imported parts, with watercraft being priced from 500,000 yuan (US$60,459) to several million yuan.

"The market should be great,'' Xu said.

The yacht manufacturing base is part of the development strategy of the city's pleasure-boat industry, with the aim of ushering in the boom of tourism over the next several years.

Shanghai plans to build 10 yacht wharves along the Huangpu River and several others along the Suzhou Creek.

"The municipal government has set up a group of experts to consider the development of the yacht industry,'' said Huang Zhengang, secretary general of the Yacht Branch of the Shanghai Association of Shipbuilding Industry.

Huang said the group has worked out a sketch which is soliciting opinions from foreign experts. But he didn't give any further details.

Two yacht wharves have been built along the Suzhou Creek and more will be set up, he said.

Insiders said construction on yacht wharves will be in line with the 2010 World Expo, which will have sites in place along the river.

Shanghai is expected to have 3.5 million foreign tourists this year, which will grow annually. The figure does not include about 1 million passengers who will be brought by large cruise ships to the city when a luxury cruise ship terminal is completed in the city's North Bund area.

Local insiders have said that ocean cruises are considered lucrative in terms of tourism, and will surely push forward the development of the city's pleasure boat industry.

Three investors -- Shanghai Jiangnan Shipyard Group Company, Hyatt International and CITIC Industrial Bank -- intend to set up a yacht company to manufacture deluxe pleasure boats priced from US$300,000 to more than US$10 million, Huang said.

Shanghai needs high-speed boats to open new lines to islands and coastal cities in Zhejiang and Jiangsu provinces, as well as deluxe pleasure boats for tourism and patrol boats for Customs, environmental protection and fire fighting.

At present, Shanghai has four factories manufacturing yachts, including two Taiwan-funded ventures, but their sales account for only a small part of the nation's 1.5 billion yuan (US$181 million) worth of yachts sold in 2003.

China began to manufacture pleasure boats with glass fibre reinforced plastic technology in the 1950s and now has some 260 factories nationwide, most being small in size.

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