We describe the modelling and computation of paper shrinkage during drying, using a finite difference method and simulated paper structure. Radial contraction of drying fibres leads to axial compression of crossing, bonded fibres. This microcompression process makes a major contribution to the shrinkage of the paper. The influence of fibre orientation is computed, and shown to be very significant, in accordance with observations. The method relies on the possibility of maintaining fixed anisotropic stiffness constants as the network rotates.