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Co-operation among the Yangtze River Delta's financial sector recently took a major step forward with the establishment of a co-operation mechanism between the central bank branches of Shanghai and Nanjing.
The two branches, which started the study of building an interactive financial network in the region at the start of 2003, launched the co-operation project at the end of last year.
According to sources at the Shanghai branch of the People's Bank of China,co-operation will begin in the business of the general offices, the currency and loan management divisions and the credit management divisions.
The co-operation includes seven categories such as organizing co-ordination, information exchange, currency and loan management and credit management.
The content of the co-operation and methods will be adjusted accordingly as the situation develops and as new problems emerge in different stages of the co-operation so as to perfect the mechanism and improve each other's efficiency.
The four biggest commercial banks have also taken a number of steps to enhance financial co-operation in the delta.
Jiangsu, Zhejiang and Shanghai also signed a memorandum last year to construct a credit system.
Experts pointed out that co-operation is significant as it has helped give this somewhat stalled plan a kick-start and would usher in more development in this field. But there are more obstacles to be overcome.
The banking associations in the three places - Shanghai Municipality, and Zhejiang and Jiangsu provinces, have been working hard to promote the cross-border and inter-bank communication and co-operation.
"It is inevitable that Shanghai will develop into an international financial centre which will benefit everyone in the long run," said Zhu Delin, secretary-general of the Shanghai Banking Association.
He said that financial co-operation in the delta is an interactive relationship and the involved administrations should end protectionism in order to achieve long-term mutual benefit.
Covering 1 per cent of total area and accounting for 6 per cent of total population of China, the conglomeration of Shanghai, Jiangsu and Zhejiang has been viewed by many to as the world's sixth-largest megalopolis with its outstanding performance and abundant potential.
"Increasing economic integration has accelerated the financial integration and the process of Shanghai's construction into an international financial centre," said Sun Chiping, director of the Shanghai Branch of the Industrial and Commercial Bank of China.
Sun said as international capital and industry keep moving to the region, there is an increasing desire to construct a market where capital, information, cargo flow and human talents can be smoothly exchanged.
Seeing the opportunities, the Hong Kong and Shanghai Banking Corporation Limited has newly established a strong foothold in the region by opening a branch in Suzhou, Jiangsu Province.
According to the financial watchdog the Shanghai Banking Regulation Bureau, although greater importance has been attached to financial co-operation in the three places, co-operation among cities and banks has met a great deal of resistance, especially as the medium and small-sized cities employ protectionism to defend their local financial resources.
"The capital attracted to the place can only be loaned to the place, which means the capital cannot be optimized in relocation," said the latest report from the bureau.
It also said that the three regulatory bureaux of financial institutions in the three places were also set up according to administrative jurisdiction, which also blocks co-operation in the region.
"The co-operation now is pretty superficial and all the involved parties should focus on a larger picture instead of on their own short-term benefits," said Hua Min, professor and director of the World Economic Research Institute under Fudan University.
(China Daily February 7, 2005)
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