The Chinese government has issued a new directive calling for the acceleration of Shanghai’s transformation into an international financial hub, with an especial focus on trials in the Lingang New Area (临港新片区).
On 14 February the Chinese central bank released the “Opinions on Further Accelerating the Establishment of Shanghai as an International Financial Centre and Financial Support for the Integrated Development of the Yangtze River Delta” (关于进一步加快推进上海国际金融中心建设和金融支持长三角一体化发展的意见).
The Measures focus in particular upon the Lingang New Area and driving the further external opening of Shanghai’s financial sector, with key measures including:
- Exploring the cancellation of foreign direct investment renminbi capital specialist accounts in the Lingang New Area, and exploring trials of domestic-foreign currency combined cross-border capital pools.
- Undertaking trials of domestic trade finance asset cross-border transfer operations in the Lingang New Area.
- Trials for allowing foreign-invested financial institutions to team up with large state-owned banks for the establishment of joint-venture wealth management companies in Shanghai.
- Supporting foreign invested institutions establishing or acquiring controlling stakes in securities companies and fund management companies in Shanghai.
- Driving the advance implementation in Shanghai of increases in the equity ceiling for foreign-invested life insurers from 51% to 100%.
- Supporting the establishment of financial holding companies in Shanghai by non-financial conglomerates that satisfy conditions.
- Encouraging multinational companies to establish global or regional headquarter institutions, such as fund management centres.
The Opinions were jointly drafted by the Chinese central bank, the China Banking and Insurance Regulatory Commission (CBIRC), the China Securities Regulatory Commission (CSRC), the State Administration of Foreign Exchange (SAFE) and the Shanghai municipal government.
Overarching demands of the Opinions including:
- Servicing the high-quality development of the real economy – “Trialling more open and convenient financial policies that make their basis the functional orientation and industry system of the Lingang New Era; steadily driving renminbi internationalisation, and implementing green finance policies. Driving the external opening of the financial sector, employing the leadership role of Shanghai as an international financial centre, and improving financial service for the integrated development of the Yangtze River Delta.”
- Deepening financial system reforms -“Exploring more flexible financial policy systems, regulatory models and administrative systems. Improving the financial legal regulatory environment, comprehensively implementing appropriately equal treatment of domestic and foreign-invested financial institutions, dovetailing with international standards and regulations, and driving high-level opening of the financial sector.”
- Preventing systemic financial risk – “Appropriately and steadily driving various financial openness innovative measures – certain measures may be trialled in advance in the Lingang New Area. Strengthening of the application of fintech in the area of regulation.”
Other focal areas of the Opinions include:
- Supporting the the development of key industries that possess international competitiveness in the Lingang New Area,
- Expediting the freedom and convenience of investment and trade,
- Expanding the level of openness of the financial sector,
- Expediting the establishment of a centre for renminbi financial asset allocation and risk management,
- Establishment of a high-quality financial operating environment that dovetails with international standards.