Authorities in Guangdong province are planning a pilot free trade zone in Nansha New Area, according to local government sources.

The free trade zone will span 24.52 square kilometers, covering the southern and northern parts of Longxue Island and Nansha Bay.

Chen Jianhua, mayor of Guangzhou, the capital of Guangdong, visited Nansha early this month to assess the site selection for the pilot free trade zone, sources with the district government website said.

A report by Shanghai Security News on Monday said the provincial authorities are negotiating with the central government to develop the free trade zone in Nansha, citing anonymous government sources.

According to the report, the plan is expected to be approved by the central government at the same time as a similar zone in Shanghai's Pudong New Area.

Authorities in Shanghai mapped out a plan at the beginning of the year to build a free trade zone in its Pudong area. That plan is ready to be submitted to the State Council, or China's cabinet, later this month for approval.

The plan to develop a free trade zone in Nansha was seen by insiders as "a key move" for Guangdong to speed up its reform and economic development, following the central government's plan to develop a State-level pilot zone in Nansha in September.

The Nansha New Area, the country's sixth State-level zone, aims to build stronger business ties with neighboring Hong Kong and Macao special administrative regions.

The new area, on the southernmost tip of Guangzhou, will enjoy a slew of preferential policies on taxes, land management, financial innovation and industrial development, according to the development plan.

During a promotional event in Hong Kong and Macao from May 13 to 15, Chen Jianhua said Nansha would be developed with its own characteristics.

"We are... to issue supporting policies in tax, finance and land use. The district should enjoy the same preferential policies as its counterparts in Shanghai and Tianjin have been granted," Chen said.

At the promotional event in Hong Kong, authorities in the area signed 17 deals with State-owned enterprises, foreign and private companies, as well as higher education and research institutes.

The deals, worth 234.8 billion yuan ($38.2 billion), involve high-end services, finance, energy, culture and film and televisions.

In Macao, district authorities also signed seven contractual agreements worth 17.05 billion yuan with Macao businesses in commercial service, logistics and cultural innovation.

According to the central government's plan to develop the Nansha New Area, Nansha will introduce a separate management system in some areas.

"According to my understanding, the separate system will include a free trade zone in Nansha New Area. It means that the zone will enjoy more preferential policies in foreign exchange, tax and customs," said Ding Li, a senior researcher with Guangdong Academy of Social Sciences.

"The establishment of such a zone will improve communication in human resources, finance and logistics among Guangdong and Hong Kong and Macao," Ding said.