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| Part Two Part of the Topics Concerned by the Foreign Investors |
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9. International Financial Center
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9.1 Present Status of International Financial Center
Shanghai has established its place as the national financial center with the market center as the main characteristics. On August 10, 2005, the People’s Bank of China, Shanghai Head-Office, was established in Pudong, and would directly promote the building of Shanghai international financial center. The State Foreign Exchange Administration issued 9 “Pioneering Experimentation and Implementation” policies on the pilot project of reform of the mode of transnational foreign exchange administration, trial-implemented the concentrated management of RMB and foreign exchange funds, offshore financial business,relative separation of the flow funds from the flow of goods, etc.. This has become symbolic progress in promoting the construction of Shanghai international financial center and played a key role. |
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9.1.1 Financial Market System
Shanghai has basically formed the financial market system with the markets of currency, capital, foreign exchange, futures, gold and property as the main part (Refer to Chart 9-1: Further Development of Shanghai’s Major Element Market ). In 2005, the total volume of the financial market exchange was 35 trillion RMB yuan, of which inter-bank market transactions amounted to
23.2 trillion RMB yuan, the inter-bank offered rate and bond transaction rate are basically market-based, and the financial market became an important market platform for the financial macro-adjustment and control of the state; the foreign exchange market transactions gradually expanded in scale and became the basis of RMB exchange rate; the volume of the security market transactions was 5 trillion RMB yuan, accounting for 79% of the country’s total, and the security market was the country’s main board market; the volume of the futures market transactions was 6.5 tril-lion RMB yuan, accounting for 49% of the country’s total, ranking one of the international pricing centers of copper, rubber, etc.; and the volume of the gold market transactions was 116.84 bn. RMB yuan. It was decided recently that the financial futures exchange would be located in Shanghai, and the financial market system will be further perfected. |
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9.1.2 Financial Institutions
By the end of 2005, there were 610 financial institutions in Shanghai, 3.3 times as many as in 2001. There were 231 institutions of the banking category, 110 institutions of security category, and 269 institutions of insurance category. Over 30 financial institutions, which play an important role in promoting the cohesive and radiational functions of Shanghai as an international financial center, such as the gold Exchange, China Union Pay and the business operation head-offices of national financial institutions, such as credit card centers, bills centers, fund operation centers, data centers, etc., and over 10 new-type institutions such as currency brokerage companies, agricultural insurance companies, car finance companies, assets management companies, etc. have settled in succession in Shanghai. At present, the total assets of the financial institutions in Shanghai amount to 3.2 trillion RMB yuan, accounting for 9% of the country’s total. |
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9.1.3 Internationalization Progress
With the opening of the financial industry of our country, Shanghai’s financial industry has significantly strengthened its cooperation in terms of capital, management, products, technologies, high-caliber professionals, etc.. Shanghai has become the city which has introduced from abroad the greatest number of foreign-invested financial institutions. At present, there are 320 foreign-invested and equity joint venture financial institutions of different categories in Shanghai. The total amount of assets of foreign-invested banks in Shanghai accounts for over 50% of that in the country, the market share of the total amount of assets of foreign-invested banks and their loans in the whole city has exceeded 10%, a total of 28 foreign-invested banks have selected Shanghai as the location of their China business main reporting banks, accounting for appox.67% of the total number of foreign-invested banks in China. The premium earnings of foreign funded insurance companies have a 17% market share in the city. Various financial exchange markets have established relations of cooperation and exchange with internationally well-known exchanges. A number of joint venture security companies, fund management companies and insurance companies have been organized and established. The introduction of strategic investors by Chinese-funded financial institutions have made a major breakthrough in introducing from abroad strategic investors, well-known international financial institutions such as the City Bank, Hong Kong Shanghai Banking Corporation, etc. have respectively become shareholders of Bank of Communications, Pudong Development Bank and Bank of Shanghai. |
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9.1.4 International Financial Business
The statistics released by the People’s bank of China, Shanghai Head-Office, indicates that the foreign exchange movements were in general healthy and stable, and the scale of foreign exchange income and expenditure and foreign exchange settlement and sale continued to expand in 2005.
The foreign exchange income and expenditure of the year totaled 259.7 bn. USD with a favorable balance of 22.9 bn. USD up14.5 bn. USD y-o-y, foreign exchange settlement income up 32% yo-y, and foreign exchange sale expenditure up 8% y-o-y.
In 2005, H-Share financing amounted to18.9 bn. RMB yuan. According to statistics released by China Securities Regulatory Commission, in 2005, the listed companies raised 188.3 bn. RMB yuan in total, and domestic listed companies raised as high as 18.9 bn. USD in the H-Share market, and 14 of them raised 15.3 bn. USD by issuance of H-Shares for the first time.
At present, the wealth management scale of the foreign-invested banks is close to 2 bn. USD. According to the statistics released by China Banking Regulatory Commission Shanghai Supervision Bureau, by the end of 2005, the wealth management scale of the foreign-invested banks was close to 2 bn. USD, and the number of individual investors had increased speedily, contributing nearly half of the total. By the end of 2005, 14 foreign-invested banks in Shanghai had brought to the market wealth management products of different types, and the balance of the wealth management products was 1.99 bn. USD, up 11.3% y-o-y. The foreign-invested banks in Shanghai actively participated in the market transactions of derivative products. By the end of December 2005, the nominal value of the over-the-counter contracts of the foreign-invested banks in Shanghai was 22.95 bn. USD, up 11.2% from the same time of the previous year. |
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9.1.5 Environment of Financial Environment
After its establishment in September 2002, Shanghai Financial Service Office strengthened the coordination among different departments and improved the public service. Outline of Action for Building Shanghai International Financing Center
formulated by Shanghai determines the goal and direction; specifies the policies and measures in support of the development of the financial industry and strengthens the organizational cohesive effect; optimizes the layout of Lujiazui financial industries, establishes Zhangjiang bank credit card industrial park and broadens the space for the development of the financial industry; strengthens the construction of a credit system, and optimizes the credit basis for the development of the financial industry; strengthens the cooperation with supervisory departments and judicial departments, cracks down on financial crimes, protects the lawful rights of the creditors and maintains financial safety and stability; and exercises the strategy on financial professionals of high-caliber, makes efforts to raise the level of professionals and the related work as required by the market, internationalization and modernization. By the end of the 10thFive-Year Plan Period, Shanghai’s financial system had 305 senior oversee financial professionals, and 50% of managerial personnel of the intermediate grade had come from all over the country. In 2005, the Finance Research Institute of the Chinese Academy of Social Sciences conducted a systematic evaluation of the environment of financial ecology of the cities of the country, and Shanghai ranked first in the comprehensive evaluation of the environment of financial ecology. |
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