Shanghai to improve biz environment

Further institutional innovation and deepened opening-up are crucial to strengthen Shanghai's competitiveness as an international financial center, said experts.

Their comments were made following the new action plan released on Wednesday to support the development of Shanghai as an international financial center, which was jointly drafted by the National Financial Regulatory Administration and the Shanghai Municipal Government.

Made up of 27 detailed measures, the action plan said that foreign financial institutions will be supported to play a larger role when Shanghai advances its efforts to grow into an even more potent international financial center.

During his keynote speech delivered during the Lujiazui Forum on Wednesday, NFRA head Li Yunze stressed that opening-up and cooperation have been strong drivers of China's financial reform and development. Foreign institutions are important participants and active contributors to the construction of China's modern financial system. Experience has shown that foreign institutions are important bridges and ties via which capital, knowledge and technologies are introduced into China, Li said.

Foreign insurance heavyweights AIA Life and Aegon Group were recently approved to set up asset management companies in Shanghai, Li added.

Zhang Xiaoyu, AIA regional chief executive and AIA Life chairman, said the latest approval — which is a result of China's institutional opening-up and new development paradigm — will allow AIA to better coordinate their long-term assets and liabilities.

Sticking to the long-term investment rule and playing the role of patient capital, AIA will anchor its investment on serving China's real economy, Zhang said.

The newly released action plan also said that Shanghai will be supported to create service platforms for new-type asset management.

Tu Guangshao, founding director of the Shanghai Advanced Institute of Finance, underlined the importance of strengthening Shanghai's asset management functions. For one thing, technology advancements have bred new types of assets such as intellectual property rights, data, green assets and digital assets. Addressing these new trends is in line with Shanghai's role as an international financial center.

Additionally, Shanghai — as an international financial center — should further support Chinese companies' outbound reaches, during which process companies' overseas assets are formed. Therefore, it is crucial for Shanghai to give equal weighting to the management of both domestic and overseas assets, he said.

Fang Xinghai, deputy head of China Capital Market Society, said on Wednesday that Shanghai should take more steps concerning the internationalization of the renminbi as it consolidates its role as an international financial center.

As he further explained, providing global RMB holders a financial environment with ample liquidity and a complete supply of hedging tools is crucial to the wider use of the Chinese currency. Without such an environment, the proliferation of the RMB in terms of international settlement, investment and financing — which is denominated in yuan via trade of goods and transactions of financial products — may not last long, as foreign exchange risks will hold up international investors.

Therefore, an international financial asset trading platform should be launched at a faster pace in Shanghai to make more RMB assets accessible to international investors. RMB forex futures and options should be rolled out while treasury bond futures should be further opened up. Over-the-counter derivatives and offshore financing functions should be strengthened. All these are conducive to the wider use of the Chinese currency, which will in turn accelerate Shanghai's development as an international financial center, said Fang.

Pan Gongsheng, governor of the People's Bank of China — the country's central bank — said during the Lujiazui Forum on Wednesday that RMB forex futures trading will be advanced with joint efforts from the China Securities Regulatory Commission so that financial institutions and foreign trade companies can better manage forex risks.