City follows Beijing in welcoming tourists with three-day exemption.

Shanghai hopes to cement its burgeoning reputation as a global tourist hotspot by allowing visitors to spend three days in the city without a visa.

Related: Beijing approves 72-hour visa waiver for tourists

As a new year commences, citizens from 45 countries will be permitted a 72-hour visa-free stay inside the "administrative area" of Shanghai, the municipal government said on Sunday.

The countries include the United States, France, Japan and Australia.

The new policy, approved by the State Council, comes four days after Beijing officially announced a similar program, the first city to do so. That will also be introduced on Jan 1.

Shanghai already had a program allowing visitors from 32 countries a 48-hour visa-free stay.

"The extra 24 hours is of great significance and will boost tourism," said Zhao Huanyan, senior researcher at the Tourism Research Institute under the Shanghai Academy of Social Sciences.

Shanghai has a different charm than cities like Beijing or Xi'an. It usually takes a longer time for tourists to be attracted to its beauty, say a night cruise on the Huangpu River, or a banquet and a shopping spree in the crooked alleys, Zhao said.

"The extra day will also allow business visitors to the city, the financial center of the country, more time to enjoy a city tour."

While the city's outbound travel has been enjoying double-digit growth in recent years, inbound tourism fell last year, but there are signs it is picking up.

In 2011, the number of foreign tourists visiting Shanghai reached 8.18 million, a 4 percent drop from the previous year that saw the successful hosting of the 2010 World Expo.

But it is expected that in 2012 the number of inbound overseas travelers will rise to 8.25 million, a 3 percent increase.

"The new policy will benefit airlines, travel agencies, shopping areas and, importantly, five-star hotels," said Zhao, adding that the city's supply of high-end hotels far outnumbers demand.

According to real estate service firm Jones Lang LaSalle, Shanghai tops other Chinese cities with the largest number of four and five-star hotels, and is set to add another 80 to 100 hotels in the next three years.

However, during the first nine months of this year, the average price of five-star hotel rooms in the city dropped by 8.54 percent, while the price for an equivalent room in Beijing saw a 10.9 percent jump, according to Zhao.

"The new policy is definitely good news for us," said Tang Weiwei, communications manager of Shanghai Pudong Kerry Hotel. "We believe it will result in more guests."

Yu Sejie, general manager of Wabco China, a vehicle control system provider based in Brussels, said it will greatly improve the efficiency of global companies like hers, which organizes annual flights for thousands of overseas colleagues and partners every year for conferences.

"It usually takes a month for my secretary to go through visa-application procedures to invite our foreign colleagues to our two or three-day workshop," she said. "The new policy will certainly make our work a lot easier."

It will also help Shanghai Pudong International Airport become an international transport hub, aviation experts said.

China News Service recently cited the Shanghai Municipal Office for Port Service as saying that during the first half of 2011, less than 100,000 of the 10.31 million passengers at the Pudong airport were transit passengers.

Globally, the proportion is between 25 to 30 percent.

The notice issued by the municipal government said the city's two airports, Shanghai Hongqiao International Airport and Shanghai Pudong International Airport, will set up a special channel for visitors entitled to visa exemption. More details will be released.

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