Shanghai has laid down ambitious plans to strengthen its
position as an international financial center.
According to a blueprint unveiled yesterday for the 11th Five-Year Plan period (2006-10), the city
will capture at least 25 percent of the nation's funding business
including stocks and bonds.
The plan highlights four main elements in the development
framework. The first involves establishing a world-renowned
financial market system, in which both domestic and foreign
investors can participate.
By the end of 2010 the city's monetary market is expected to
have a trading volume of 80 trillion yuan (US$10.2 trillion). At
the end of October this year, the figure was 46 trillion yuan
(US$5.48 trillion) and in 2005 it was 34 trillion (US$4.33
trillion).
According to the blueprint, the authorities also hope to build
Shanghai Futures Exchange Market into one of the world's top
10.
The second task is creating a diversified banking system, in
which both domestic and foreign financial institutions with
international competitiveness can grow together.
By 2010 the deposit balance for Shanghai's banks will reach 4.5
trillion yuan (US$573.4 billion). The figure was 2.3 trillion yuan
(US$293.1 billion) at the end of last year, according to the
National Bureau of Statistics.
Loan balance will reach 3.2 trillion yuan (US$407.7
billion)?in 2010, jumping from over 1.6 trillion yuan
(US$203.9 billion) last year, according to reports by Xinhua News
Agency.
The third task is building a trading center for innovative
financial products to meet China's economic development needs.
According to the plan Shanghai will greatly encourage financial
reform such as Internet banking and securities.
By 2010 more than 70 percent of stores in the city will be able
to handle banking card consumption. This is up from about 50
percent last year. Banking card consumption will account for more
than 40 percent of the total retail sales in 2010 while it was 32
percent in 2005, Xinhua reported.
The fourth major task is ensuring a healthy regulatory
environment that complies with internationally accepted
standards.
Experts agree that Shanghai needs to take steps to develop its
financial markets.
"The percentage of funds raised directly in the capital market
is small compared to bank borrowings," said Gao Yuan, a stock
analyst at Guangda Securities. "It's very necessary for China and
Shanghai to develop the capital market to meet the demand for
development funds of rapidly-expanding enterprises."
"The building of Shanghai as an international financial center
doesn't start from today. It began years ago," said Cao Xiao, a
professor of financing at Shanghai University of Finance and
Economics.
"Shanghai has undergone years of preparation for this objective
and now everything is almost ready," Cao added. "Shanghai will very
likely become an international financial center with its focus on
the trading of Renminbi products."
(China Daily November 28, 2006)