Chinese state media reported on Monday the shipyard, covering eight kilometres of coast along Shanghai's Changxign Island, would be fully operational by 2015 with an annual capacity of eight million tonnes.
The 3.6 billion dollar project aims to make China the world's leading shipbuilding nation by transforming its state-run China State Shipbuilding Corp (CSSC) into the world's largest shipmaker.
"It will be the largest (shipyard) in the world and it will also help CSSC become the world's top shipbuilder," CSSC general manager Chen Xiaojin said.
CSSC vice general manager Zhou Zhenbo said the yard would be capable of churning out high-tech liquefied natural gas carriers, supertankers and luxury liners.
It would also help boost industries such as steel and engine manufacturing and create jobs for more than 80,000 people, earlier reports said.
Two existing shipyards, the Jiangnan and the Hudong, would be relocated to the new super-yard, in part to make way for construction projects at the site of the 2010 World Expo in
China is already the world's third largest shipbuilder after South Korea and Japan and the State Council, or cabinet, has made clear it wants to become number one, outlining an ambitious shipbuilding development plan earlier this year.