A keenly-contested game in difficult conditions ended 0-0 after 90 minutes, with City then losing 3-2 in the shoot-out
City should have been ahead after 20 minutes. Leroy Sane was brought down inside the box by Adama Traore after showing an excellent turn of pace to get clear, but Raheem Sterling blazed the resulting spot kick over the crossbar.
Sterling should probably have done much better with an attempt from point=blank range moments later, but he failed to make decent contact after good work by Danilo down the right.
Wolves improved after the break, with Diogo Jota and Joao Moutinho both going close, but side began to tire as the heat in Shanghai increased as the evening progressed.
City’s best effort of the second period saw David Silva’s magnificent curling free-kick clawed away superbly by Rui Patricio with the ball heading for the top corner.
The shoot-out saw City miss three times - Ilkay Gundogan, David Silva and Lukas Nmecha all failing to convert, and it was Wolves who take the trophy back to England.
Moment of the match
Kevin De Bruyne's flick in the air followed by a half-volley cross-field pass straight to Leroy Sane.
It was a moment of pure class and a reminder, if one were needed, of the man's unerring accuracy with a football.
City enjoyed a whopping 66 per cent possession.
Man of the Match
De Bruyne's first-half performance was outstanding, with his range of passing impressing as ever.
If he can stay fit throughout the season, it will be a huge boost for City. He was a significant
The squad travel to Hong Kong tomorrow to prepare for the game against Kitchee on Wednesday.
It’s then over to Japan to play fellow City Football Group side Yokohama F. Marinos.