MEASURES to support the city's free trade zone are to be given top priority, Shanghai Mayor Yang Xiong said yesterday as he delivered his half-year government work report at the Expo Center.

The city's customs policies, for example, will have to be changed to allow imports to enter and exit the zone without intervention, Yang said.

"The key to building the free trade zone is institutional innovation rather than preferential policies," he told city lawmakers and political advisers.

The city will first launch test operations on various policies while controlling risks and then gradually work out complete regulations for the free trade zone, he said.

Last month, the State Council gave the green light for Shanghai to trial China's first free trade zone, the latest step in a national strategy to open up markets and build Shanghai into an international trading and financial hub.

In a free trade zone, goods can be imported, manufactured and re-exported without the intervention of customs authorities.

Construction of the free trade zone will be top of the city government's work agenda for the rest of this year, Shanghai Party Secretary Han Zheng said earlier this month.

Shanghai's gross domestic product expanded 7.7 percent from a year earlier to 1.02 trillion yuan (US$164.5 billion) in the first half of this year, the Shanghai Statistics Bureau has said.

The rate slowed a bit from an increase of 7.8 percent in the first three months but was higher than the national average of 7.6 percent between January and June.

The bureau did not provide a second-quarter growth figure. But it can be deduced that the city has posted faster growth than the national average for two consecutive quarters.

Meanwhile, the mayor revealed that Shanghai would be taking advantage of the free trade zone to further adjust its industrial structures as one of the city's major tasks for the next half of the year.