A proposal to build a regional free trade zone encompassing three key areas in the Pearl River Delta — Guangdong province and the neighboring special administrative regions of Hong Kong and Macao — has been submitted to the State Council, China's cabinet, for approval, the Shanghai Security News reported on Tuesday.

The Shanghai-based newspaper cited a "well-informed" source as saying that close and effective talks related to the proposal had been conducted between authorities in Guangdong and the State Council.

The proposal, which was submitted in mid-December, will soon be approved by the top authority, according to the newspaper.

However, Niu Jing, director of the administrative committee of the Hengqin New Area in Zhuhai, which will be included in the Guangdong-Hong Kong-Macao free trade zone, said a timetable for the approval of the proposal hasn't been determined.

"We have been working with the provincial authorities to conduct research on the feasibility of the establishment of the free trade zone. So far, we have not been informed when the proposal will be approved," Niu said.

A deputy director of the general affairs office with the Guangdong Provincial Development and Reform Commission declined to comment on the proposal on Tuesday, saying there is no timetable for approval of the proposal.

The proposal was jointly developed by the province's development and reform commission and its foreign economic and trade authority, according to the deputy director, surnamed Lu.

According to the Shanghai newspaper, the FTZ will include Nansha in Guangzhou, as well as the capital of Guangdong, Qianhai in Shenzhen neighboring Hong Kong, Hengqin in Zhuhai bordering Macao and the Guangzhou Baiyun Airport Comprehensive Bonded Zone.

However, Lu said, "it's yet to confirmed that the Baiyun Airport Comprehensive Bonded Zone will be included in the proposal".

If the proposal is approved, the zone will cover more than 1,000 sq km, making it much bigger than Shanghai's FTZ, which is about 28 sq km.

The proposed zone will focus on the expansion of service industries between Guangdong and the two neighboring SARs, the newspaper said.

It will develop a new mode of international trade and build up a modern financial services zone, according to the newspaper.

Niu said that Hengqin, a demonstration area for exploring a new mode of cooperation among Guangdong, Hong Kong and Macao, has "natural" advantages in offering free trade services.

"Hengqin is not simply an economic development zone but a new comprehensive area especially covering modern commercial, trade and finance services," Niu said.

Since the implementation of the Overall Development Plan of Hengqin, which was approved by the State Council in 2009, the island district, which is three times the area of Macao, has attracted investment of 3.67 billion yuan ($600 million) from Hong Kong and Macao, according to Niu.

"Most investments are linked to the modern service industries, ranging from finance, culture and information technology to science, educational research and traditional Chinese medicine," Niu said.

Since the launch of the Shanghai FTZ in September, a growing number of Chinese cities and provinces, including Tianjin and Wuhan, the capital of Hubei province, have been reportedly applying to establish such zones to drive economic development.

Ding Li, an economist at the Guangdong Academy of Social Science, said more innovative measures would be tried in the proposed free trade zone among Guangdong, Hong Kong and Macao.

"The formation of such a cross-border zone could provide a strong hinterland for the offshore yuan business in Hong Kong, such as allowing easier investment of offshore yuan back to the mainland," he said.

Ma Xiaodong, a senior financial analyst, said the Guangdong-Hong Kong-Macao free trade zone will be beneficial to strengthening cooperation and integration among the three regions.

"Based on the great advantages of port facilities, the zone will not only drive the development of the local economy but promote the development of trade on the Chinese mainland," Ma said.