Shanghai opened a free economic zone on Sunday to lure foreign investors to China.
Covering 29 square km in the east of the city, the zone was approved by the State Council last month. It The includes four existing bonded zones.
Restrictions on foreign investment will be eased inside the area and interest rates will be set by markets.
The BBC reports 18 sectors, ranging from finance to shipping, will have regulations loosened in the zone.
The State Council said on Friday that under a trial, the yuan can be be swapped freely for other currencies.
The new zone is being seen as the most important attempt at reform since Deng Xiaoping designated Shenzhen on the border with Hong Kong as a special economic zone in 1980.
"The establishment of the Shanghai free-trade zone is a significant move for China to conform to new trends in the global economy and trade," said Commerce Minister Gao Hucheng at an opening ceremony on Sunday.
China's economy expanded 7.7% last year, its slowest pace in 13 years.
