Now that the Shanghai free trade zone has got the State Council's approval, people have begun to wonder what Shanghai would be like without it. The short answer is all those big plans for becoming an international financial center and a global trading hub will remain, well, big plans for many years to come.

The free trade zone would provide the conditions for Shanghai to make a real breakthrough from its present mode of development. Without it, the city is constrained from realizing its ambitious dream because of the national economic and financial structure, regulatory environment, bureaucratic inertia and entrenched political and business interests.

Of course, China is fast changing. But it will likely take decades before the system is loosened up enough for Shanghai to take flight. As it is, Shanghai must be content to play host to the largely domestic capital market. With the newly developed deep-water port, Shanghai is well established as a major sea port servicing its vast Yangtze River Delta hinterland.