This was the highest level dismissal of a government official on corruption charges in over a decade and has been trumpeted by the central government in Beijing as proof that it is genuine in fighting endemic graft.

But many have seen strong political overtones in the firing and that it could be as much to do with moves by President Hu Jintao to diminish the power of his predecessor, Jiang Zemin, whose powerbase remains Shanghai.

Before retiring in 2003, Jiang, who also once served as Shanghai's top party official, placed many of his allies in positions of power to ensure he also retained some influence, analysts said.

Among those known to be allies of Jiang are Vice Premier Huang Ju, parliamentary head Wu Bangguo and Vice President Zeng Qinghong -- all of whom are still politburo heavyweights.

But the dismissal of Chen -- also well known to be a protege of Jiang -- has shown that Hu is prepared to take on the "Shanghai clique" and that the eastern city's golden era of political dominance is coming to an end.

"There has been a shift of influence under Hu Jintao and (Premier) Wen Jiabao away from Shanghai towards other segments of China's system," said Bob Broadfoot, managing director of the Political and Economic Risk Consultancy in Hong Kong.

"Politically ... you're going to see Shanghai people fall in influence and people from other areas that are close to Hu and Wen rising in power."

Jiang's decades-long influence in Shanghai is considered to have been one key factor in spurring the city of now 17 million people to tremendous economic growth and the kind of success that has symbolized China's economic "miracle".

Shanghai's gleaming skyline, consumerism and the billions it has garnered in foreign cash was testament to the winning formula of the Chinese economic model -- a mixture of private investment under strict government direction.

Given the importance of Shanghai as an economic powerhouse few expect Hu and his allies to dramatically change the way the city goes about its aggressive development.

"In terms of Shanghai's basic economic growth, or how many foreign investors are going there, the tendency of foreign investors to look at Shanghai as one of the wealthier faster growing municipalities, none of that has changed," Broadfoot said.

Laurence Brahm, a political economist and author of the books: "China's Century" and "Zhu Rongji: the Transformation of Modern China", agreed that the reshuffle would not have a major impact on the running of the city.

"It's quite like corporate politics; if your bosses change and then they decide they don't like the way the department is running, they may change people ... but they are not going to stop the business of the company, it's their business too," said Brahm.

Shanghai mayor Han Zheng, named as Chen's interim replacement, has also sought to reassure the city's business community that little will change following Chen's firing.

"I will lead my colleagues to go all out to maintain the stable and coordinated development of Shanghai's economy and society, and to make every effort to fight against corruption," Hong Kong's Wen Hui Bao newspaper quoted him as saying.

China To Stop Officials Fleeing Shanghai Graft Scandal
Shanghai (AFP) Sep 26 - Extra police been deployed at Shanghai's airports and ports to stop government officials from fleeing after the city's top leader was busted for graft, Hong Kong newspapers said Tuesday. The stepped-up security comes a day after the government announced that Chen Liangyu, Shanghai's top Communist Party official, had been sacked for alleged links to the misuse of up to 400 million dollars of the city's pension fund.

In Beijing, a party disciplinary chief told reporters on Tuesday that the innvestigation into the scandal was continuing.

"As the investigation deepens more people are likely to be implicated," said Gan Yisheng, vice head of the party's Central Commission for Discipline Inspection.

Special police have been dispatched to prevent officials who may be involved in the case from fleeing, the pro-Beijing Ta Kung Daily and the Hong Kong Economic Times reported.

The passports of senior Shanghai officials have also been confiscated, as have their travel permits to Hong Kong and Macau, the Ta Kung Daily said, without citing sources.

It said that three official Shanghai delegations to Europe and Australia had been cancelled, while top officials also now needed to get special permission from the ruling Communist Party to travel abroad.

Hong Kong's Sing Tao newspaper gave a similar account of the extra security measures, also without citing sources.

As well as losing his Shanghai job, Chen was ousted from the party's powerful 24-member politburo, making him the most senior official to fall over graft since President Hu Jintao, the party chief, came to power in 2002.

Chen was involved in misusing social security funds in China's financial hub and helping to enrich relatives and friends, the official Xinhua news agency said on Monday, citing a politburo decision.

His sacking is seen as widely strengthening Hu's hand as he seeks to fight corruption ahead of widespread leadership changes expected to come late next year at the five-yearly Communist Party Congress, according to analysts.

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