The first law effective only in Shanghai's Pudong New Area, expected this year, will ensure and encourage innovation in the free trade zone, a top Pudong official said.

"Some company heads and entrepreneurs in the FTZ have bold business ideas that might go beyond the existing legal system. They don't dare 'run the red light'," said Pudong Party secretary Shen Xiaoming during the second session of the 14th Shanghai People's Congress, the city's legislature, which opened on Sunday.

Because some new initiatives are against current regulations, lawmakers in Pudong will ask the municipal congress to allow them, Shen said.