The Shanghai Free Trade Zone could prove a game-changer for foreign banks that are struggling in China by creating an offshore financial market where they can put their expertise to good use, according to a leading domestic economist.

"Eventually, all kinds of financial transactions that can be conducted in the international market will be permitted for banks inside the Shanghai FTZ," Lian Ping, chief economist with the Bank of Communications, told China Daily by phone.

"The area will be an offshore financial market where they can do business with the entire world," he said.