China opened a new free trade zone in Shanghai on Sunday in what has been hailed as potentially the boldest reform in decades, and gave fresh details on plans to liberalise regulations governing finance, investment and trade in the area.

Officials gave no details on when specific initiatives will be implemented but the government has said most will be introduced in the next three years.

The Shanghai FTZ, which covers an area of nearly 29km on the eastern outskirts of the commercial hub, was approved by China's State Council, or cabinet, in July.

State-run Xinhua news agency quoted Commerce Minister Gao Hucheng as saying that the creation of the FTZ was a crucial decision for China's next wave of reform and opening-up.

"It follows the trend of global economic developments and reflects a more active strategy of opening-up," Gao said at the launch ceremony.

The State Council said on Friday it would open up its largely sheltered services sector to foreign competition in the zone and use it as a test bed for bold financial reforms, including a convertible yuan and liberalised interest rates.

Sustainable growth path

Economists consider both areas key levers for restructuring the world's second-largest economy and putting it on a more sustainable growth path.

Some Chinese and foreign firms are already setting up subsidiaries in the zone.

A total of 25 companies so far have been approved to start operations in a variety of sectors, alongside 11 financial institutions, most of which are domestic banks but including the mainland subsidiaries of Citibank and DBS.

Ralph Haupter, corporate vice president of Microsoft Corp, speaking on the sidelines of the opening ceremony, said Microsoft was excited about the zone's potential.

"Details and sizes of business are hard to predict at this stage. But business is continuously growing and the entertainment business is very important for us at Microsoft."

A Xinhua report quoted a document from China's Ministry of Culture saying the ministry would remove a 13-year old ban on video game console manufacture and sale for companies registered in the zone, provided the products were approved.

"Foreign game machine manufacturers will be eligible to sell their products in China, merely via their entities registered in the zone," the report said.

Source: Reuters