The move is expected to attract more foreign investment to Shanghai, which is aiming to position itself as a global financial center.

"We'll delegate more powers to the lower-level commerce commissions to facilitate foreign investment in the city," said Sha Hailin, director of Shanghai Municipal Commission of Commerce (SCOFCOM).

According to Sha, foreign investors have set up 16 regional headquarters, five investment companies, and 10 research and development centers this year, taking the total number of international companies in the city to 708.

"The relaxing of the foreign investment approval process will help reduce the complex procedures for international firms and also improve efficiency," said Tan Ruyong, professor, Shanghai University of Finance and Economics.

Shanghai, the biggest industrial and financial metropolis in the mainland, has taken a much heavier toll from the financial crisis as its economy is largely dependent on foreign firms.

The city posted a year-on-year growth of 5.6 percent in gross domestic product with 661.3 billion yuan ($96.81 billion) in the first half, but it was still lower than the national increase of 7.1 percent in the same period.

Latest data from SCOFCOM show that Shanghai attracted $5.15 billion foreign investment during the first six months of this year, up 2.5 percent from the same period last year.

"The city's geographical location and preferential policies of the local government made us chose Shanghai as our Asia-Pacific headquarters," said a marketing person surnamed Liu from Geberit, a Swiss sanitary solutions provider.