Shanghai has been expanding rapidly since 1980 when Chinese planners decided to develop the Yangtze River Valley and turn Shanghai into one of the major financial powerhouses of the world.
"The city has been sinking at the speed of nearly 10 millimetres a year," Zhang Xiangyu, director of the Shanghai Water Supply Administration told the paper.
Shanghai's rapid growth and massive urban population has lead to over-exploitation of local ground water supplies.
This, together with underground construction such as subways and basements below skyscrapers, has lead to ground sinkage.
Mr Zhang said the key to solving the problem is to stop the ground from sinking.
Financial powerhouse
Shanghai has been expanding rapidly since 1980 when Chinese planners decided to develop the Yangtze River Valley and turn Shanghai into one of the major financial powerhouses of the world.
The city's newly developed Pudong financial area lies east of the Huangpu River and occupies an area 520 km sq with a population of 1.4 million. The sheer weight of this new development is helping to compress the soil still further.
Compounding the problem is the city's location on an alluvial plain at the mouth of the Yangtze River.
This acts a bit like a giant sponge - as groundwater is pumped out, the sponge begins to shrink.
Global warming
In response Shanghai officials have drafted a series of laws on the annual drawing of groundwater.
Any enterprise using water is now officially required to pump back double the amount of water it extracts.
However, the city is also facing a challenge from the effects of global warming which is causing the nearby East China Sea to rise dramatically.
Unless significant measures are taken soon experts warn that the sea level around Shanghai could rise between 50 and 70 centimetres by 2050.
If action isn't taken now they say China's main commercial hub could sink below sea level in less than half a century.