SHANGHAI is set to become a global yuan trade center by 2015, with its
financial market transactions almost tripling to 1,000 trillion yuan
(US$158 trillion), city authorities said yesterday as a detailed plan
for the future international financial center was revealed.
The
plan, published by the National Development and Reform Commission,
China's top economic planning agency, and the Shanghai government, shows
the scale of the country's ambition in creating its own version of New
York or London.
It envisages Shanghai becoming a leading
international financial hub and global center for yuan trading, clearing
and pricing by 2015.
By then, the Shanghai Interbank Offered
Rate and the yuan central parity rate will become major benchmarks for
yuan asset pricing and transactions both domestically and
internationally.
Yesterday's announcement was the first detailed
follow-up since the State Council announced in 2009 its aim of making
Shanghai an international financial hub by 2020.
To achieve
these goals, Shanghai will speed up infrastructure construction to build
a cross-border yuan payment and clearing network geared toward global
demand, an unidentified Shanghai official said in a statement. A
cross-border yuan investment and financing center will also be
established, he said.
Shanghai and Hong Kong, as two major
financial centers in China, will continue to step up communication and
cooperation in areas such as financial markets, institutions, products,
businesses and talents, he added.
Economists said the plan
coincides with Shanghai's long-term mission to become a leading
international financial center, adding that authorities may speed up
liberalization of yuan exchange rates and interest rates to meet the
goal.
But they also pointed out some shortcomings, such as
immature financial institutions, non-transparent operations, and the
tight controls on conversion of the yuan and use of foreign exchanges,
will limit Shanghai's role in global markets.
"Compared with the
long-term targets announced three years ago, the newly released
detailed plan has a clearer focus on the yuan deals," said Zhou Hao, an
economist at ANZ Bank. "The gradual internationalization of the yuan
provides a good foundation for Shanghai to realize its goal. Shanghai,
as a top domestic financial center, will be the best place as a yuan
center."
He said the city's status would be lifted as China aims
to expand yuan settlement in cross-border trading, and the need to
develop the city's international appeal will also push authorities to
speed up market-oriented reforms of exchange rates and interest rates.
Lu
Zhengwei, a chief economist with the Industrial Bank, said the plan is
effectively urging the goal to be realized five years earlier than
originally planned.
But Zhou said the government's regulatory
stance may have a significant impact on the city's attraction to global
financial players. "There's no doubt that Shanghai will become a robust
international financial center by 2015, but its local importance may
still exceed its global one ..."
The authorities are also aiming
to boost the transaction value of financial markets in Shanghai,
barring foreign exchange markets, to around 1,000 trillion yuan by 2015.
By then, direct financing, such as fundraising from domestic
stock and bond markets, will account for around 22 percent of the social
financing in Shanghai, while assets under management will reach 30
trillion yuan, the statement said.
The scale of overseas
investment in the city's financial markets will be markedly expanded by
that time, with major stock indices and commodities futures prices of
those markets having a greater global influence.
Source: http://www.shanghaidaily.com/article/?id=493258&type=Business
