BEIJING has sent more than 100 investigators to Shanghai to investigate a corruption scandal that could provide an opportunity for the Chinese President, Hu Jintao, to assert his control over a city that was the powerbase of his predecessor.

Zhang Rongkun, China’s 16th-richest man; the head of Shanghai’s Labour and Social Security Bureau; and the governor of one of 19 city districts have been taken in for questioning or sacked in connection with the case involving misuse of government pension funds.

The scandal is the biggest to rock the futuristic metropolis that is China’s financial heart, and it threatens to weaken the power of former President Jiang Zemin, who retired to Shanghai after he stepped down in 2002, to exert his influence over Chinese politics from behind the scenes.

The latest and most senior official to fall victim to the investigation is Qin Yu, the governor of the Baoshan district in Shanghai. A city spokesman said that his case was linked to that of Zhu Junyi, the head of the Social Security Bureau, who was placed under investigation last month for taking bribes.

Mr Qin’s detention will leave the city’s leaders vulnerable to investigation over their responsibility for what the state media has described as the most severe scandal to rock Shanghai since the launch of China’s economic reforms in the 1980s.

Among those who risk implication after the latest development is Chen Liangyu, who as municipal Communist Party chief is the top official in the city. Mr Qin worked as his secretary in 2002 when Mr Chen was Mayor of Shanghai.

President Hu has been eager to stamp his authority on Shanghai by removing his predecessor’s protégés and putting his own people into office. The task is becoming increasingly urgent for Mr Hu as he jostles with Mr Jiang and other senior leaders to try to ensure that he can appoint his own nominee as his heir-apparent when the party convenes a five-yearly Congress in late 2007.

His first chance to reshuffle his loyalists into place will come in October when the 300 or so members of the party’s Central Committee will hold a plenum. Jockeying for position has begun and the Shanghai scandal will mean that, with the city’s party secretary on the defensive, Mr Hu could overlook him for promotion or even unseat him.

The publicity given to the investigations of senior Shanghai officials could also be a sign of Mr Hu’s confidence.

The US-based consultancy, Eurasia Group, said that the scandal offered the clearest evidence yet of Mr Hu’s growing power. It said: “Central authorities will likely prevent direct incrimination of Shanghai’s top leadership, but they will use the scandals to weaken local authorities enough to enable [Mr] Hu to transfer them out of the city during next year’s party congress.”

The decision by Beijing to send investigators into the city is to make sure that local officials cannot use their influence to protect themselves or their friends.

Property developers and executives of local financial companies are being asked about their links to Shanghai’s social security system, which manages more than 10 billion yuan ($1.25 billion) in funds, amid suspicions that money has been siphoned off through illicit loans or investments.

The former social security chief is suspected of impropriety involving a 3.2 billion yuan loan of city funds to the toll road operator Fuxi Investment Holding Co. Mr Zhang, Fuxi’s chairman, rose from obscurity to become one of China’s richest men this decade despite still being in his early 30s. He is among those held for questioning. Forbes magazine, ranking him China’s 16th-richest man last year, estimated his fortune at $605 million (£320 million).

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