Netanyahu, who arrived a day earlier at the start of an official visit to China, toured the Shanghai Jewish Refugees Museum which includes the Ohel Moshe synagogue that once served the community, a museum official said.
"Seventy years ago, only Shanghai opened the door to provide a sanctuary to Jewish refugees," Netanyahu was quoted by Shanghai's Liberation Daily newspaper as saying.
From the early 1930s, tens of thousands of Jewish refugees who fled Europe made Shanghai their home.
Their movements were restricted but they were never targeted for extermination, despite requests from officials of Nazi Germany, Japan's ally at the time.
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"We hope to develop closer cooperation with China, so we can take pride not only in 70 years ago but also in the future," Netanyahu said.
The Israeli prime minister is due to meet Chinese President Xi Jinping and other top officials in Beijing later this week, following a visit by Palestinian leader Mahmud Abbas.
Wang Jun of Tongji University, which has a programme with Tel Aviv University to explore redeveloping the ghetto, said the link between Shanghai and the Jewish people could serve as a base for future Sino-Israeli cooperation.
"Shanghai protected tens of thousands of Jewish refugees. For Israel, for the Jewish people, the significance is exceptional," he said.