HONG KONG (Reuters) - Shanghai has kicked off a plan to allow the establishment in China of wholly foreign-owned hospitals in key economic zones, biopharmaceutical areas and downtown districts that are home to many expatriate residents.

The commercial capital is the first city to announce steps after the central government said in September it would the allow wholly foreign-owned hospitals in nine locations including Beijing.

The aim is to attract investment, improve business sentiment among foreign investors and reinvigorate the world's second-largest economy where growth has been sluggish.

Shanghai will allow foreign-owned hospitals in key economic zones including the Lingang Special Area and Hongqiao business district, the municipal government said in a statement on its website on Wednesday.

Through the initiative, the city aims to further the opening up of China's healthcare sector, enhance the diversity of healthcare services and improve the business environment.

Prospective foreign owners are required to demonstrate advanced hospital management concepts, models and service standards, as well as provide cutting edge medical technologies and equipment at an international level.

However, they are not allowed to establish hospitals specialising in certain areas, including traditional Chinese medicine or infectious diseases.

Foreign-owned hospitals must have at least 50% of their health professional and technical personnel from the Chinese mainland, China's National Health Commission said in November.