Innovation in the investment system will be the driver for the economy rather than policy incentives, said a top official in Shanghai, as the city draws up reform plans ahead of the establishment of its free trade zone.

Yang Xiong, mayor of Shanghai, said the pilot free trade zone is as significant as the Pudong New Area to the world's second-largest economy.

"However, this time it's not about policy incentives, but about forming principles that will bridge global standards," he said, adding that these principles could be duplicated elsewhere in the country.