China has decided to lift the ban on social networking sites including Facebook Inc (NASDAQ:FB) and Twitter, but limiting the access only to free trade Zone in the city of Shanghai, says  South China Morning Post, citing unnamed government sources.

 Lifting of ban to fuel economic reforms

Government of China is expecting a boost in the economic reforms by lifting the ban, and it will further “encourage significant financial and economic reforms” in the free-trade zone, according to SCMP’s sources. Further, the country is going by the plan to expand the free-trade zone to the entire Pudong district, if the first phase of the launch is successful. Free trade zone is a place with fewer restrictions similar Hong Kong with its own set of rules.

In a similar decision, earlier, China pulled off its infamous Great Firewall to let open social media use during the 2011 World Cup and also for a short period during 2008 Olympic Games in Beijing.

Foreign firms can now bid for Internet services license

China will, further, allow foreign telecommunication companies to bid for license in the free trade zone to provide Internet services along with the Chinese state owned operators. Today, Microsoft entered into a joint venture with a Chinese company BesTV to design games, which will apparently be registered in the Shanghai Free trade Zone.

China has put some strict policies for Internet access in the country to maintain the discipline. However, investors might turn reluctant to invest in China due to lack of internet freedom, which China cannot afford at this time.

Twitter, Facebook banned since 2009

Twitter and Facebook are banned in China since 2009 though they are a huge success elsewhere. China launched its own micro blogging network Sina Weibo, which became massively popular over the past few years. In last few years, Sina Weibo expanded to around 300 million users standing in competition to state media and threatening its monopoly. China holds the world’s largest internet user population, which is about 485 million.

Facebook and Twitter were fastened with stricter bans after they played an active role during political movement in the Middle East, in the recent years. China is only second to the United States in economic growth, but ironically puts ban on social media.