Shanghai's selection as the pilot site of a free trade zone by the State Council is nationally significant for economic and financial reforms, said an article in the 21st Century Business Herald (excerpts below).

The government's preferential policies are diluted by rising costs facing many businesses and local governments should take this into account.

Shanghai has a perfect opportunity to make this zone operate efficiently and smoothly.

Although more than 400 international companies have their branch headquarters in Shanghai, most of them are of an administrative nature.

Shanghai must be more aggressive in pushing the envelop in financial and tax reforms, making breakthroughs in cross-border renminbi settlements and perfecting trade and foreign exchange administration systems.

The city should also open up the service sector to private and foreign capital.