Shanghai city government is examining the possibility of free port status for the deep-water facility being built along Zhejiang's Yangshan islands.

The study is focused on the management model of terminals and a trans-oceanic bridge, the system of the port administration, and other free port policies.

"The effort is aimed at creating a favourable shipping environment in conformity with international practices,'' said Gu Gang, president of Shanghai Tongsheng Investment (Group) Company.

His words were echoed by Xu Peixing, director of the Shanghai Port Administration, who said the new deep-water port should have an international, liberal and stable environment if the city wants to become a global shipping centre.

Many of the world's international shipping centres have adopted the status of "free port'' which has effectively promoted the development of economy, trade and shipping services, Xu said.

"Studies are being conducted on the feasibility of `bonded warehouses' at Yangshan, and new policies are being worked out to further decrease the overall business costs,'' he said.

Favourable policies will be adopted to attract the world's top 20 liner companies to move their China or Asia head offices to Shanghai, Xu said.

Local shipping experts are also calling for governmental innovations in the concept and systems on Shanghai's way to becoming a free container hub port like Hong Kong and Singapore.

A free port should include deep-water terminals, a first-rate shipping exchange environment and a shipping information centre in the Asia-Pacific region. A large logistics centre, a free port system in line with international practices, and an international shipping environment with excellent services would also be required.

"But free port policies are crucial for the city to reach an international shipping centre in Northeast Asia,'' said Zhu Jianhua, chairman of the BOD of Shanghai Shipping Exchange.

In terms of hardware, Zhu said, Shanghai is approaching the finest international shipping centres. But a fairly large gap exists in shipping administration, policies, laws, the market system and port operation efficiency.

"Shanghai should draw on foreign experience to find out its own weaknesses so that its software development can keep pace with the development of its hardware facilities,'' he said.

Preliminary work will include an application sent to the State Council to establish a free port and working out relevant laws and regulations as soon as possible.

If approved by the State Council, the Yangshan deep-water port will become the Chinese mainland's first free port.

"The city should also establish a free port administration committee and its executive offices for the Yangshan Port,'' Zhu said.

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