Prices of homes and shares in companies that are located in or near the China (Shanghai) Pilot Free Trade Zone (FTZ) have surged dramatically recently, with investors holding high expectations for the potential of the zone, which is officially launched on September 29, 2013. [Photo/Xinhua]

The China (Shanghai) Pilot Free Trade Zone was launched this morning, marking a trial run for groundbreaking changes to free up cross-border commodity and capital flows in the world's second largest economy.

A first batch of 25 Chinese and overseas companies were granted the licenses to register in the trial zone this morning.

China on Friday unveiled a detailed plan for the pilot free trade zone. The country will allow free yuan convertibility under the capital account, interest rates liberalization and cross-border use of yuan in its first free trade zone on a trial basis as long as the risk is controlled.

The government said it will also establish a suitable foreign exchange management system for the zone to facilitate trade and investment.

The FTZ will allow the market to decide prices of financial institutions' assets, a process known as the securitization of those assets, as policy-makers hope to catalyze further reforms through such an experiment.

The free trade zone, launched today, integrates four existing bonded zones — Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone.