Shanghai should continue to take bold moves to promote reforms in the city’s pilot free trade zone because new challenges are emerging as the zone expands, Mayor Yang Xiong said yesterday.

“We will face lot of new issues after the Shanghai zone is expanded beyond the bonded areas to include more functions,” Yang said at a meeting during the annual session of the Shanghai Committee of the Chinese People’s Political Consultative Conference, the city’s political advisory body.

To further boost openness, clarify government responsibilities, duplicate successful measures to areas beyond the zone and include reform of mechanisms for technology innovation into FTZ trials are among new issues to be resolved, Yang said.

Shanghai has been granted approval to include the Lujiazui financial zone, Jinqiao development zone and Zhangjiang high-tech zone into the China (Shanghai) Pilot Free Trade Zone, increasing the area it covers from 28.78 square kilometers to 120.27 square kilometers.

Since the free trade zone was launched in September, 2013, a number of reforms have been introduced.

These include the streamlining of Customs clearance procedures, lower thresholds for foreign investment, cutting red tape in government administration and boosting financial liberalization.

Among them, 27 have been promoted and implemented nationwide.

“After the expansion, we should consider piloting technology innovation system reform in the zone to better integrate the building of Shanghai into a science and technology innovation center,” the mayor said.

Yang praised financial reforms that have been rolled out to promote convertibility under capital accounts, interest rate liberalization and cross-border use of the yuan as well as the launch of the stock trade link between Shanghai and Hong Kong, but he called for an acceleration in moves to build Shanghai into an international financial center.

In response to complaints that the free trade zone’s negative list, which specifies off-limit areas for foreign investors, is too long, Yang said the regulator is considering a 2015 list.

However, he said that it had not yet been decided whether Shanghai will share the list with the three newly-established free trade zones in Tianjin City and Guangdong and Fujian provinces.

Yang was speaking after hearing proposals from political advisers on how to amplify the impact of the zone and boost economic upgrading.

Xi Junyang, a finance professor at Shanghai University of Finance and Economics, suggested the setting up of more international trading platforms, for example, for equities transactions, shipping freight derivatives and commodities, to attract foreign participation in the zone.

As only zone-based individuals and institutions are allowed to trade in such platforms, Xi advised the introduction of FTZ-related mutual funds so investors outside the zone can also invest in the zone.

Yuan Guangming, head of the China private banking unit of the Bank of East Asia, said the government should allow individuals to invest in overseas capital and property markets by opening capital accounts in the zone.

“Enterprises should also use the zone as a springboard to take advantage of low funding costs in overseas markets and boost internationalization through overseas mergers and acquisitions,” Yuan said.