According to sources, the government will offer land at below market prices on condition that the property firms undertake to sell the completed buildings to multinational corporations at discounted prices.

It hopes this will help attract big-name companies to relocate their headquarters or other key facilities to Lingang from other parts of the mainland or the world.

Under the master plan, the main city area will house the financial, business, education, travel, leisure and residential sectors.

The initial population will be 350,000 and will increase to 800,000 when the development is completed in 2020.

But Shanghai faces competition from other cities also intent on attracting foreign firms.

John Yip Ying-chee, an executive director of Henderson Land Development, said other coastal provinces such as Jiangsu and Liaoning had approached the firm to make a field trip to sites set aside for the development of proposed new cities and port developments.

These cities had similar plans for their development, said Mr Yip, citing as an example the port of Nantong on the lower Yangtze River which was looking for foreign investors for port and logistics-related development.

In Dalian, Lioaning, the city government said in early 2007 it planned to develop Changxing Island to rejuvenate the old industry bases of northeast China and bolster foreign economic ties.

This included building a satellite town in Dalian with a population of 500,000 in 15 years in a bid to become a major component port serving international shipping centres.

Investors banking on Shanghai to position itself as an international finance centre and shipping hub by 2020 should therefore take a long-term view, said Mr Yip.

'As an investor, we will ask for more incentives in the early stages of development in order to minimise our risk,' he said. 'The decision will be determined by the attractiveness of the preferential terms to be offered by the local governments.

'But we will study all the proposals to see how we can participate.'

Singapore-listed Yanlord Land Group said it would look into the latest Shanghai land proposal.

'We also want to contribute to the development of Yangshan Port as it is a key project in Shanghai,' said Michelle Sze, the head of investor relations at Yanlord.

The company would also be interested in participating in the residential development projects in the area since this was its area of expertise, Ms Sze said.