China's first state-level announcement on building a Disneyland in Shanghai indicated that the park's initial size may be much smaller than widely expected.

Its growth potential and contribution to the city's economy will still be substantial, according to analysts.

The news, however, disappointed some local Disneyland fans, who had hoped the Shanghai park could immediately bring more choices of rides and games than counterparts in Hong Kong and Tokyo.

The National Development and Reform Commission said late on Monday that in October it approved Shanghai's Disneyland project, which will occupy 116 hectares, or 1.16 square kilometers, in Chuansha Town in the Pudong New Area.

Comparatively, the size of the Disney park in Tokyo is 201 hectares while that of Hong Kong Disneyland is 126 hectares.

The Shanghai project will include an amusement park, logistics and public utility areas as well as a parking lot, the NDRC said in a statement.

It will be funded by Chinese and United States companies, it said, without offering details.

The NDRC did not say whether the land approved is for the initial phase or the whole project.

Earlier media reports said that Shanghai Disneyland would have three phases with a combined area of up to 10 square kilometers.

The Shanghai government in September started a relocation project to make way for the Disneyland.

A notice on the Website of the city's land regulator showed that initially 4.09 square kilometers of land would be requisitioned.

The Walt Disney Company said yesterday that it could not comment as it had yet to reach a final deal with the city government on the project.

Officials at the NDRC were not available for comment.

"The project will only be developed step by step in line with market response," said Wu Ke, a Zhongtian Investment Consulting Co analyst.

"Thanks to the city's prime location and economic dynamics, Shanghai Disneyland has great growth potential even if its initial size is small," Wu said.

The 1.16-square-kilometer area may just be the core area of project, the Xinmin Evening News reported yesterday, citing sources familiar with the matter.

Nearby facilities would include a hotel, a huge shopping mall and other service facilities, it said.

This month Shanghai and Walt Disney announced they won approval from the central government to build the theme park in Pudong.

Economists said that a Disneyland could help the city sustain economic growth through investment and spending after the Shanghai 2010 World Expo, a six-month event that starts next May.

Some observers have even labeled the Disney park project as a "never-ending Expo," adding that it could spur the city to raise its capabilities to receive visitors and improve quality in services.

"The initial size is not that important as people's curiosity could help boost attendance," said Zheng Jianyu, a Bank of Communications analyst. "But long-term performance will hinge on the pricing strategy and the park's new elements."

An online survey conducted by Xinmin.cn showed yesterday that more than half of 300-odd respondents expected a smaller entrance fee in line with the size of the park.

"I'm a bit disappointed about the size," said Lu Zhen, a 28-year-old sales manager.

"If the park is bigger, I willgo there twice or even more, butnow I may go only if there is aprice discount. I've already visited the Hong Kong park."