The Shanghai Film Studios are as old as cinema and so is Shanghai’s place in movie lore and history. In the 1890s the city hosted China’s first public film show as part of a teahouse variety bill. In the 1930s and 1940s it obsessed global audiences with the lubricious lure of its far-flung cosmopolitanism: great films noirs were born that celebrated the town’s name in their very titles – Shanghai Express, The Shanghai Gesture, Welles’s The Lady from Shanghai. Moving on into futurism, Shanghai’s late-20th-century life as a skyscraper capital made it the inspiration for prophesies of sci-fi dystopia, from Ridley Scott’s Blade Runner to Michael Winterbottom’s Code 46.

Coming now for western audiences is Ang Lee’s Lust, Caution. The 2007 Venice Golden Lion winner, largely shot in the Shanghai studios, is thick with the perfume of the city’s history at its most pungent and poignant. Between 1937 and 1940 Shanghai saw the upheavals of the Japanese invasion, when native people were massacred (notably in nearby Nanking, now named Nanjing), Europeans fled, and rich Chinese packed their bags for that rival Sino-Babylon, Hong Kong. For a while – or so Lust, Caution suggests – Shanghai stayed in character as a place of intrigue and orchidaceous subterfuge, where a woman spy for the Chinese resistance (Tang Wei) could use ancestral seduction ploys to attempt the ruin of a Chinese collaborator (Tony Leung).

Lee is not the only Chinese-born filmmaker to have given world resonance to this studio’s landmarks: its epic stretch of mock-up Nanjing Road complete with fully functioning trolley bus , its alleys and mansions that were period-dressed for Farewell, My Concubine, its taverns and stunt dens that sold a billion tickets for Kung Fu Hustle.

When foreign directors want “essence of Shanghai” they, too, come here. But something can go missing in their hands. The White Countess, the last Anglo-western prestige project shot here, was a piece of anaemic European chinoiserie, throwing director James Ivory and star Ralph Fiennes at a story similar to Lust, Caution’s – intrigue, diaspora, historical upheaval – but missing the sense of driven authenticity Lee achieves, even in studio-shot scenes. At the end The White Countess bursts out on to the Bund, for another iconic ritual dear to movies set in Shanghai (see Spielberg’s Empire of the Sun), in which humanity flees inhumanity along the most famous riverbank in the world.

While oriental filmmakers invariably get it right about Shanghai – from the doomy opulence of Zhang Yimou’s Shanghai Triad to the period delicacy of Hou Hsiao-hsien’s Flowers of Shanghai – western filmmakers are most faithful to the city when least literal. In the 1930s and 1940s Hollywood didn’t bother with the real topographical town, just with its myth-riches as a topos of dangerous exoticism. In Shanghai Express (1932) and The Shanghai Gesture (1941) Josef von Sternberg piled dream-Pelions on the eastern Ossa, creating a Babel of mingling cultures and micro-political intrigue, of multivalent gambling, of polymorphous-promiscuous sexuality smoked, refined and narcotised in the land of the opium den. Marlene Dietrich’s one-liner in Shanghai Express became a kitsch classic: “It took more than one man to change my name to Shanghai Lili.”

Half a century later, Shanghai became another kind of Babel, one that actually reached for the sky. The architectural brainstorms of high-rise Pudong, on the east bank, made the place a symbol of the future. It was as if the melting pot of the between-wars city had been upended and distended, internationalism going vertical not horizontal.

The first classic screen response came from a British director adapting an American sci-fi writer. Ridley Scott’s Blade Runner was based on a Philip K. Dick story but set, the director vouchsafed, in a city closer to Shanghai than to the nominal Los Angeles, even in a supposed 2020. The very climate Scott painted – unearthly vaporish drizzle – belongs to the Chinese city. During my visit, walking back to my 80th-floor berth in the tallest hotel in the world, the Grand Hyatt in the Jinmao Tower, I looked up each evening to see the top swirled about by phosphoric vapours blended from cloud, smog, rain, straining floodlights. It was as eerie as the ear pop experienced as I elevated to my thousand-foot eyrie, where floor-to-ceiling windows give a queasily thrilling view of the Blade Runner-ish lightshow below. All those winking electric colours; all those pulsing rainbow-phalluses that are Jinmao’s junior or rival skyscrapers.

Historically, Blade Runner’s obsession with high-tech incandescence was a perfect homage to the city that introduced electric light to Asia. Michael Winterbottom’s sci-fi thriller Code 46, by contrast, proves the rule that in western movies about the east, imagination can be better than propinquity. Shot in Shanghai itself, the movie misses its quintessence. It finds only shadows of the exotic myth-firings, flickering with sinister grandeur, that danced in the kilns of Blade Runner.

What Scott caught, consciously or intuitively, was the city’s phoenix magnificence. Mao Zedong tried to kill off Shanghai’s glories, including its filmic ones. Stigmatising it as the bleeding heart of western decadence – a chambered life-pulse coursing with errant freedoms just like partitioned Vienna or Berlin (only more so) – he wound down its cinemas, closed its private studios, persecuted its actors, writers, filmmakers. Shanghai would be honoured instead as the city where communism was born, in a historic 1921 meeting of its infant grandees (marked by a plaque in the now-fading French Concession), and where the Cultural Revolution was launched half a century later. What capital of liberty and libertinism could recover from that?

Shanghai could. Aptly, the movie that had just wrapped shooting when I visited the studio was The Mummy 3. (The de Chirico people were from a new Chinese period thriller.) The west is back in the east. Hollywood has a laissez-passer to China’s first foundry of filmmaking. And what story could better suit Shanghai’s resurrection as a city of colour and defiant magic than that of a mythic-presumed-dead creature – the relic of an ornate bygone civilisation – that stomps back to life?

China’s new energy transfusion may still work fitfully. If you want an example of Mao’s legacy, see the Chinese-censored version of Lust, Caution. Bowdlerised of the sex scenes that caused gasps in the west but that are central to this tale of sadomasochism micro-personal and macro-historical, the movie sank like a stone. Resurrection still needs work in China. But Shanghai, as so often in its history, is the pacesetter and show-city: the place where the difficult is made possible, the imaginary real, the particular paradigmatic.