The state-owned building was named China Zun Tower and broke ground last Monday, the investment giant CITIC Group spokesman said.
CITIC, the building developer and owner said the building will be used as its offices and a tourist attraction as well. It will have a viewing area for sight seeing and a cafe with a panoramic view.
A few meters meters away from its location is the 330-meter tall China World Trade Center Building's tower 3, currently Beijing's tallest building.
The state investment group said t
he building will use latest energy saving technology to save on power consumption.
Economic progress brought about by China's vibrant export sector has paved the way for the construction of skyscrapers in key cities including Shanghai and Beijing to accommodate demand for offices and residential units.
Shanghai is host to many tall buildings that caters to multinational companies and domestic users. Some of China's tallest buildings are located in Shanghai which hosts the Shanghai World Financial Building, the tallest since 2007.