Openness, innovation and inclusiveness: opening the 'five centers' to the world to achieve Shanghai's potential - 2025-10-12

Shanghai's "five centers" – economic, innovation, financial, trade and shipping – already retain leading positions globally, and further reforms and opening-up in these areas will ensure future development of the city, and of China more broadly.

Past impressive achievements were made possible in the span of just a few decades, thanks to bold reforms and policies of openness and inclusiveness. The Shanghai Pilot Free Trade Zone, the first in China and established in 2013, has piloted innovative policies including easier business registration, freer trade and increased foreign investment access, which have subsequently been replicated nationwide.

Pushing further such initiatives will help catalyze Shanghai's economic growth, attract foreign investment, foster industrial development, innovation and technological advancement.

Oliver Bäte, chairman of the board of management and chief executive officer of Allianz SE

Economic center

Shanghai is already the largest city by GDP in the world's second-largest economy. Retaining inclusive and open policy frameworks will remain critical to drive future growth.

Openness to international trade facilitates the flow of goods, capital and ideas, stimulating economic growth. Additionally, unlocking the potential of private consumption and services could prove to be a key driver of future economic development, thanks to policies such as strengthening the social safety net, increasing public support in health care and pension-related services and enhancing high-quality manufacturing to cater to the growing demand for quality goods. To continuously achieve progress in high-quality manufacturing, innovation is needed.

Innovation center

Shanghai is part of the world's fifth-largest science and technology cluster, with China ranking as the 11th most innovative nation globally. At the same time, innovation output per capita has room to improve, and China is not yet a global leader in a number of innovation input factors.

An open innovation ecosystem promotes knowledge sharing. The strategic partnership between Allianz and Fudan University can boost Shanghai's modern services sector.

Developing Shanghai's innovation potential further could be achieved through policies that attract talent from around the world (such as fast-tracking visas, housing support, etc) and policies that attract foreign businesses and investment (such as further easing market access, improving the business environment, and strengthening and enforcing intellectual property laws).

Financial center

Shanghai is home to the third-largest stock exchange globally by market capitalization and is the natural gateway into China's gradually opening capital markets. Over the past two decades, China's financial opening has evolved from tightly controlled access for select foreign investors to allowing full foreign ownership in many financial sectors, from Stock Connect links to inclusion of Chinese equities and bonds in global index providers.

Virtually all major financial markets are present in Shanghai: equities, bonds, foreign exchange, commodities futures, financial derivatives, insurance, etc. To cement Shanghai's status as a global financial center, policies could consider focusing on further expanding market access and loosening capital controls, deepening market capacity and driving financial innovation, and strengthening institutional foundations and regulatory transparency.

Trade and shipping center

Shanghai hosts the world's busiest container port in the world's largest country by trade. While recent trade policy shifts (notably in the US) create headwinds for the short-term outlook and may accelerate structural changes in global trade and supply chains, China and Shanghai will likely retain a dominant global position.

To solidify Shanghai's status as a global trade and shipping center, policymakers could consider strengthening the professional services ecosystem (such as legal and arbitration services, ship finance, and marine insurance; attracting further global shipping companies' headquarters); further enhancing domestic, regional and global integration and cooperation (by collaborating with global partners, facilitating the exchange of knowledge, hosting global events, etc); and continuing to increase regulatory transparency and predictability.

Finally, the port of Shanghai is investing and making notable progress in digitalization and green port initiatives – trends that should continue to keep up with other major ports across the world.

All in all, Shanghai should build on the already globally dominant position of its "five centers" to generate further growth potential for the future. Efforts to continue increasing openness and the city's attractiveness to foreign businesses and international investors will further contribute to Shanghai's success as a global economic powerhouse.

Source: Shanghai Daily