Progress and challenges for Shanghai as a global financial center

Shanghai has made remarkable progress in solidifying its status as a leading international financial center. As of last April, it was home to 1,736 licensed financial institutions, with one-third being foreign-funded.

Shanghai has witnessed the establishment of China's first foreign-controlled securities firms, its first wholly foreign-owned insurance holding company, its first foreign-owned life insurance company, and its first foreign reinsurer.

Initiatives such as the Shanghai-Hong Kong Stock Connect, Bond Connect, and Shanghai-London Stock Connect have further enriched its financial landscape.

The latest edition of the Global Financial Centres Index, published by British think tank Z/Yen Group in September 2023 ranked Shanghai seventh globally.

In 2023, the city claimed the top spot nationally by accounting for 43.5 percent of China's total cross-border renminbi settlements, according to data from the Shanghai Head Office of the People's Bank of China, the central bank.

Despite the renminbi securing more than half of China's cross-border settlements, its global footprint remains modest; comprising only around 4 percent of total global payments. This signals significant potential for further global expansion.

Compared with financial powerhouses like New York, London, and Singapore, Shanghai still faces challenges. Multinational financial service corporations headquartered in Shanghai are less than one-third of London's, and the Shanghai Stock Exchange still has no overseas-listed companies. The average daily Forex trading volume is only 3.8% of London's, emphasizing the need for increased internationalization.

To address this, the city is mulling building international financial asset trading platforms, such as the Shanghai Stock Exchange’s international board, to attract overseas financial assets.

Plans also include establishing an international board for reinsurance and promoting renminbi internationalization and cross-border financial data flow.

With a commitment to financial security, Shanghai aims to strengthen core technologies for financial infrastructure, lead in rule formulation, and enhance cross-border interconnectivity.

The expansion of the Cross-border Interbank Payment System globally, headquartered in Shanghai, underscores the city's dedication to ensuring financial safety and fostering international financial prominence.