Standing on giants' shoulders to see further, China's metropolis Shanghai now tests and spearheads the nation's reform and opening-up drive, after an economic miracle created through such efforts spanning more than 30 years.

Aiming to further facilitate trade and investment as well as to fully deepen reforms and widen opening up, the world's second-largest economy has set a new experimental field through the establishment of a pilot free trade zone (FTZ) in Shanghai, which began operation on Sunday.

The Chinese government said the initiation of the FTZ is a national strategic necessity in that it will help speed up the government's functional change toward less market intervention and explore innovation and management methodology.

"The inauguration of the Shanghai FTZ is not without a reason. It is built on a mutually boosting mechanism between opening up and reform for nearly 35 years," said Zhou Hanmin, vice chairman of the Chinese People's Political Consultative Conference Shanghai Committee.

Unlike previous special economic zones launched by China, the Shanghai FTZ stresses the service sector, rather than export-oriented manufacturing.

Lowering tariffs and introducing favorable policies in selected economic zones used to be the hallmark of opening up; however, the FTZ is different in that it does not emphasize reduction of tariffs, but rather convenience for trade and investment, said Zhang Youwen, a researcher on world economy at the Shanghai Academy of Social Sciences.

"The Shanghai FTZ represents the highest opening standard so far in China. It has marked the fourth step in the country's reform and opening up in the past 35 years," added Chang Xiuze, a researcher with the National Center for Economic Research at Tsinghua University.

Previous reforms included the founding of the special economic zone in Shenzhen of south China's Guangdong Province in 1980, the confirmation on China's socialist market economy status in the early 1990s, and China's entry into the World Trade Organization in 2001.

Chang said that these efforts and trials had brought about huge transformations to China's economic, political, cultural and social fields, and continuously revitalized China out of its rigid systems.

"China's reforms in the past 35 years, including the establishment of special economic zones in Shenzhen and Pudong, have provided a large quantity of experiences for the FTZ," according to Tan Yalin, president of the China Forex Investment Research Institute.

They also provided references to China for further refining reforms and risk control in the FTZ, Tan said.

For Sun Lijian, a Fudan University professor, the launch of the FTZ is a response to economic problems at home, such as excessive production capacities and a growth model that relies heavily on government-led investment.

The FTZ is also a decision made as developed economies are accelerating efforts in reshaping global trade rules through trade agreement talks such as the Transatlantic Trade and Investment Partnership and Trans-Pacific Partnership that excludes China, Sun said.

A blueprint released on Friday by the State Council, the cabinet, revealed a detailed list of tasks such as widening investment options via opening up the service sector, pushing forward trade upgrading, and deepening financial reforms including testing a convertible yuan and market-setting interest rate in the zone.

Experts pointed out that development in the past 30-odd years has seen China catapulted from 10th position in the world's economic rankings in 1978 to second position today. However, they warned that the old growth model driven by heavy reliance on resource consumption and extensive development is hard to sustain and China urgently needs a "baptism" to induce new vigor for future growth.

Zhang Youwen said the essence of the FTZ is institutional innovation and reform in finance, fiscal matters, trade and governance, the success of which will serve as an exemplary case for the whole nation, as mandated in the cabinet's blueprint for the zone. Endi