The launch of Shanghai's FTZ is related to the country's overall reform as it is a comprehensive, systematic institutional arrangement, covering foreign investment management, fiscal and tax policy, logistics management and government administration reforms. The smooth operation of the FTZ requires the joint efforts and collaboration of all related departments.

A major task of the FTZ is to explore the establishment of an administrative system that can match the high-level international trade and investment rules, this means promoting the transformation of government management from "prior approval" to supervision.

There will be challenges to the management of the Shanghai FTZ, especially in the field of financial supervision to cushion the impact on domestic financial market caused by foreign capital flows.

And the biggest challenge will be financial reform, which covers testing the liberalization of interest rates in the financial market, the convertibility of RMB capital accounts, the cross border use of RMB and a comprehensive implementation of trade and investment facilitation.

The development of the Shanghai FTZ is designed to promote China's economic reform and opening-up in an all-round way, and it will play a leading role in this regard, but it does not affect other bilateral and multilateral free trade arrangements, nor will it replace nationwide reform of the economic system.

One FTZ is far from enough for China. Several regions with advantageous conditions and strategic significance should be selected for other pilot FTZs, and they should compete with the Shanghai FTZ in an orderly manner. Through mutual promotion, mutual learning and common development, these pilot zones can ensure the smooth, orderly and accelerated expanding of reform and opening-up.

The establishment of the Shanghai FTZ is a substantial step forward for China's opening-up. In the coming years, we need to follow the overall reform objectives and requirements, strengthen top-level design, and seize the opportunity to advance reforms in related fields. In the process of building free trade zones, managers should properly handle the relationship between reforms inside and outside the zones, pay attention to isolate and prevent risks, prevent regulatory arbitrage and give full play to the role of all kinds of foreign trade and cooperation arrangements so as to effectively promote China's reform and opening-up.

The author is a professor in finance and deputy director of Information Department of China Center for International Economic Exchanges.