China has approved an "experimental" free trade zone in its commercial hub Shanghai as it tries to promote economic reforms, the government said Thursday.

The State Council, or cabinet, recently approved the zone after giving the preliminary go-ahead in July, the commerce ministry said in a statement.

It said the government would later give details of what would be allowed in the free trade zone, which will combine four existing development zones in Shanghai.

"Building... an experimental free trade zone will benefit and educate China to face a new trend of global competitiveness," the ministry said.

Among the planned reforms are greater liberalisation of the services sector and wider opening of the financial industry, it said, but gave no further details.

A free trade zone, in principle, allows goods to be imported, manufactured and re-exported without the "intervention" of customs, Chinese state media has reported.

Shanghai already has bonded areas, which allow companies to import goods without paying tax unless they enter China for sale in the domestic market.

Shanghai Mayor Yang Xiong told lawmakers in July that the planned free trade zone would not rely solely on preferential policies but rather on institutional changes.

Shanghai is seeking to further build itself into an international trading centre.

Approval of the zone came as China's economy, the world's second largest, slows -- in part because of weaker exports.