British Broadcasting Corporation
Shanghai woman walks past Disney decor, 2004 Disneyland has been trying to get into Shanghai for a decade
The Chinese government has approved plans for the Walt Disney Company to build a theme park in Shanghai, its first in mainland China.
The central government approval of the Magic Kingdom-style park, in the Pudong district, comes after years of talks.
Disney hopes to open Shanghai Disneyland by 2014, at a reported cost of about $3.6bn (£2.17bn).
The announcement comes two weeks before US President Barack Obama makes his first official visit to China.
'Devastating blow'
Disney said the announcement would allow it to sit down with the Shanghai government to hammer out a final agreement on the project.
BBC correspondent Chris Hogg Chris Hogg, BBC News, Shanghai
Disney has been working on this for more than a decade. The company had agreed the framework for the deal to build the theme park in Shanghai with the local government. In the past, Shanghai's mayor has described Shanghai and Disney as like two lovers who know they're in love with each other but are finding it hard to decide when exactly to get married.
That was because the deal needed Beijing's approval. This was the biggest hurdle the company had to clear, so the fact that they have achieved it means the park is all but certain to be built. Disney can now sit down with the Shanghai government and intense negotiations can proceed to try to reach a final agreement. It won't be far off.
Disney president and CEO Robert Iger said: "China is one of the most dynamic, exciting and important countries in the world, and this approval marks a very significant milestone for the Walt Disney Company in mainland China."
Disney has about 5,000 branded locations selling merchandise across mainland China and hopes the presence of a theme park will further boost sales to a population of 1.3 billion.
The company says the park will have "characteristics tailored to the Shanghai region".
It will reportedly be about 10 sq km (four sq miles) in size.
The official Xinhua news agency quoted Shanghai officials as saying large state-owned firms would form a joint investment venture with Disney.
The park will be Disney's fourth outside the US, after Tokyo, Paris and Hong Kong.
Government officials in Hong Kong insist the Shanghai park will not be a competitor.
Secretary for Commerce and Economic Development Rita Lau insisted China could accommodate two parks.
However, Democratic Party vice-chairwoman, Emily Lau, told the RTHK broadcaster the news was a "devastating blow" to Hong Kong Disneyland.
"We've committed tens of billions of dollars and now I just don't know how we will ever recoup back the money."
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