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Shanghai boosts global financial status

Monday 30 January 2012 – by Karina Whalley

Shanghai has announced a raft of proposals aiming to catapult the city to premier global financial centre status including rapidly boosting its capital markets and opening them up to foreign investment by 2015.

The National Development and Reform Commission and the Shanghai city government released a 25-page report on Monday, identifying four areas on which to focus growth in China’s most populous city.

By 2015, the document says Shanghai’s financial market turnover should reach RMB10tn (€1.2tn/$1.6tn) while the nascent derivatives market should be among the top five global hubs in three years.

The city also wants to “significantly improve the degree of international financial integration” and aims for tighter links with global markets, encouraging foreign companies to issue bonds in the Chinese currency and list on the Shanghai Stock Exchange.

Shanghai is the commercial and financial powerhouse of mainland China and ranks fifth in the 2011 Global Financial Centres Index published by the City of London Corporation. In 2010, the Shanghai Stock Exchange was the world’s fifth largest stock market by market capitalisation.

The report said: “However, due to market imperfections, the capacity to innovate, lack of openness and other factors, there are still some gaps in the process of building Shanghai [into an] international financial centre.”

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Currently there are tight capital account controls exercised by Chinese authorities, restricting foreign investment on the SSE to those who have obtained quotas. The document says these quotas will be increased.

According to the report, the city government and the National Development and Reform Commission want to push the country’s interbank bond market into the top three in the world within three years.

Shanghai also aims to boost its financial services industry, by doubling assets under management to RMB30tn (€3.6tn/$4.8tn) and enhance its competitiveness by aligning its taxation, legal and regulatory standards with international financial centres. The city also wants to see around 32 million financial professionals working in the sector by 2015.

The People’s Bank of China said in April that the country will gradually reduce central government market interventions in an effort to expand, optimise and open up its financial market in its “go global” strategy.

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