China's first free trade zone (FTZ) that will open for business in Shanghai on Sunday will attract multinational corporations (MNC) to set up offices there and help the country's industrial competitiveness, an economic expert said.

Wang Xinkui, director of Shanghai municipal government's counsellor office, said China's megacities lag behind in their capacity to add value when compared to cities like Singapore and Tokyo.

"With the establishment of the pilot FTZ, Shanghai will be an even more powerful magnet for MNCs to set up offices, and that will boost China's competitiveness in global industry chains," said Wang, who help draw up the draft plan for the FTZ, which was made public on Friday.

Shanghai was home to 432 MNCs by the end of August this year, with another 277 foreign investment companies and 361 research and development centers.

Wang said the FTZ is a national strategy another stage of China's reform and opening-up, which started more than three decades ago.

The FTZ is important for China to cope with the new trends in globalization. "The goal of the pilot scheme is to create a replicable and flexible area instead of a traditional zone only with special policies specific to it," Wang said.