Detailed plans for the Shanghai Free Trade Zone (FTZ) have fueled hopes for further reforms and liberalization in China but some analysts think it's too early to celebrate.
"We think the importance of the Shanghai FTZ will surely surpass any other existing special zones," Ting Lu, China economist at Merrill Lynch, said in a note.
"However, we believe markets need to curb their enthusiasm if they hope the FTZ will become a strong competitor of Hong Kong... [or will] rapidly unveil a new era of comprehensive reforms for the whole China," added Lu.
(Read More: Shanghai's free trade zone - What's the hype about?)
Plans unveiled over the weekend confirmed that restrictions for foreign investment in the tightly-controlled service industry will be eased, while the domestic currency will potentially be opened up to market forces within the new 28.8-square kilometer district.
Furthermore, state officials said the zone will be viewed as a testing ground for reforms that could eventually be rolled out across China, a sign that the world's largest economy could be moving towards relaxing restrictions on foreign investment.
But according to Lu, although many investors hope the FTZ could rival the success of Hong Kong, where many Chinese companies go to raise global funds and which has thrived as an offshore center for the renminbi, he doubted this would be the case.
"There will be no special tax treatments in the FTZ, while Hong Kong's 16 percent personal income tax will continue to retain talent and headquarters of global banks," said Lu.
"Secondly, though the central government vowed to build a business environment with rule of law and international standards, the very requirement of 'replicability' might hinder bold legal and administrative reforms, which are crucial for building a center for finance and commerce," he added.