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Shanghai Daily News Digest

The Development of the Shanghai International Financial Center - 2016-10-14

 

In 2009, China’s State Council issued Advice on Promoting the Expansion of Shanghai: speeding up the development of modern service industry and advanced manufacturing industry, the development of the international financial center and the international shipping center (国发〔2009〕19号), pointing out that “by 2020, Shanghai will have basically finished the construction of an international financial center compatible with China’s economic strength and the RMB’s international status.” In order to carry out and implement the national strategy, Shanghai unveiled a series of plans and regulations to promote the city’s development of the international financial center. So, why does the city promote the international financial center development? What progress has been made in recent years? And in what fields should efforts be made in the future?

Why does the city promote the development of the international financial center?

At present, under the background of China's economic development entering the “New Normal”, the construction of the Shanghai International Financial Center is provided with four favorable conditions: policy advantage, a good credit and legal environment, location advantage of the Yangtze River Delta Economic Circle and a relatively complete financial market system.

Shanghai’s development of the international financial center is not only related to the need for the city’s better and faster development, but also the need for providing better service for the country’s overall development. It is beneficial to the expansion of financial resources operational space and the improvement of financial asset allocation efficiency so as to better safeguard China's economic and financial security.

The growth and achievements of the Shanghai International Financial Center development

In order to carry out and implement the national strategy of Shanghai International Financial Centre development, Shanghai issued regulations on six aspects of promoting international financial center construction. These are the financial market system, regional distribution and infrastructure, financial talent environment, credit environment, financial innovation environment, and financial risk prevention and rule of law environment.

During the “Twelfth Five-year” period, BRICS New Development Bank located in Shanghai, Shanghai-Hong Kong Stock Connect started, the Shanghai Gold Exchange International Board was launched, Shanghai International Energy Trading Center was approved to carry out crude oil futures trading, the cross-border payment system (CIPS) was launched and CFETS, the RMB exchange rate index, was released. The national debt futures, NCD, ETF options, gold ETF, foreign exchange options and other financial products and tools were released. The development of the Shanghai International Financial Center has made a lot of achievements.

Since the listing of the Shanghai Free Trade Zone (FTZ) in September 2013, Shanghai has focused on promoting investment and trade facilitation and driving financial opening up and innovation with the help of FTZ’s priorities, aiming at capital account convertibility and the opening up of the financial services industry. Free trade accounts, deposit interest rate marketization, payment and settlement, enterprise capital management, foreign direct investment and other various financial innovation businesses have been implemented and deepened.

In 2015, Shanghai financial industry realized the added value of 405.22 billion yuan, up 22.9% from a year earlier, accounting for 16.2% of the city’s GDP and about 4.8% higher than that of 2010. Financial markets’ direct financing totaled 9.2 trillion yuan through stocks and bonds, an increase of 2.9 times that of 2010. The international rankings of Shanghai’s stocks, bonds, futures, gold and other major financial markets increased significantly.

Future Planning

The development of the Shanghai International Financial Center’s overall goal in the “Thirteenth Five-year” Plan is that “by 2020, Shanghai will have basically finished the development of an international financial center compatible with China’s economic strength and the RMB’s international status.”
In terms of overall planning, Shanghai will take the initiative to adapt to the process of RMB internationalization and speed up the construction of RMB product market; take the initiative to adapt to the new trend of economic globalization, strengthen the construction of the linkage with the Shanghai Free Trade Zone and give further impetus to financial reform and opening up; actively adapt to the new trends of a fresh round of technological revolution and industrial revolution, strengthen the linkage with the development of a science and technology innovation center and accelerate the innovation of financial technology; actively adapt to the new demand of supply side structural reform and reinforce the financial center’s service to the real economy.

 


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