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Financial-hub vision gets new focus
March 21, 2012, Wednesday
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WHEN Shanghai unveiled its ambition to become one of the world's leading financial centers by 2020, some skeptics wondered how such a dream could be achieved when all four of China's biggest banks are based in Beijing.
The market geography is changing. Bank of China, the nation's biggest foreign-exchange bank, opened its national yuan headquarters in Shanghai yesterday.
The grand opening was attended by luminaries that included Shanghai Party Secretary Yu Zhengsheng, senior city officials and ranking representatives of financial market regulators.
Such high-profile political firepower underscores Shanghai's determination to attract global financial heavyweights to the city and turn itself into a global yuan center by 2015 - the goal set forth in the city's 12th Five-Year Plan. That's a major step toward becoming a global financial center by 2020.
Shanghai Vice Mayor Tu Guangshao, who is in charge of financial market supervision in the city, has said Shanghai welcomed major state-owned banks in China to set up secondary headquarters in the city.
China's Big Four banks - Bank of China, the Industrial and Commercial Bank of China, the Agricultural Bank of China and China Construction Bank - are all based in Beijing now. But more major lenders, including China's postal bank and imports and exports bank, are said to be considering setting up Shanghai headquarters.
The People's Bank of China, the central bank, already set up its Shanghai headquarters in 2005 to implement open market operations and conduct market research, while keeping its policy-setting base in Beijing.
Bank of China's new Shanghai headquarters are located on the BOC Tower in Lujiazui, the Pudong area often known as "the Wall Street of China." The BOC Tower is already home to the bank's Shanghai branch. The bank, set up in Shanghai in 1912, will relocate part of its management team to Shanghai from Beijing and hire more staff locally, sources said.
More than lip service
For Bank of China, the new offices are more than simply paying lip service to Shanghai's ambitions. There is a clear rationale for Bank of China to set up its national headquarters for yuan operations in Shanghai, a city perched at the forefront of currency reforms.
Shanghai is already home to the country's sole foreign-exchange trading system, and its stature has been enhanced by China's move to open cross-border trade to yuan-denominated settlements. The country launched its trial of yuan-backed cross-border trade settlement in Shanghai and Guangdong Province in 2009 before it was further expanded nationwide earlier this year.
The city has always been on the frontier of currency reform. The National Development and Reform Commission, China's top economic planning agency, said in January that it envisions Shanghai becoming a leading international financial hub and global center for yuan trading, clearing and pricing by 2015.
It was the first detailed statement on Shanghai's future since the State Council, China's Cabinet, announced in 2009 that turning Shanghai into a global financial hub by 2020 was national policy.
Of course, we are expecting more reforms related to the yuan. The much-discussed international equities board that will allow overseas companies to sell yuan-denominated shares in Shanghai is still in the pipeline. Its launch is uncertain as long as the domestic stock markets remain sluggish.
While a fully convertible yuan, which economists say is the key indicator of a truly global financial center, still seems to be far off, advocates say the policy on yuan cross-border trade settlements was an important step forward.
Drawing card
For Shanghai, the Bank of China's new yuan headquarters has become synonymous with product innovation, heightened market activity and, more importantly, a drawing card for recruitment of top-flight financial professionals.
After all, New York and London are not big financial centers because of the proliferation of their fancy skyscrapers. They have become money hubs because of the quality of the people they employ. (Let's for a second put aside the tales of all those derivatives products that caused the global financial crisis and all of the greedy fat cats garnering big bonuses even after the fiasco.)
As Shanghai sees it, people make a difference. The city wants to attract the caliber of professionals it needs to turn itself into the New York or London of the East.
In the 12th Five-Year Plan, Shanghai has set a goal of 320,000 financial services practitioners in the city by 2015, a rise of almost 40 percent from the current level.
To be sure, Shanghai has already thrived as a magnet for overseas financial institutions. By the end of 2011, more than 1,136 financial institutions had operations in the city, almost double the number at the end of 2005. These institutions include the China subsidiary of HSBC, Citigroup and American International Assurance.
Bank of China is just the start of something bigger. No wonder its opening ceremony in Shanghai drew such rapture from the city's top officials.
The market geography is changing. Bank of China, the nation's biggest foreign-exchange bank, opened its national yuan headquarters in Shanghai yesterday.
The grand opening was attended by luminaries that included Shanghai Party Secretary Yu Zhengsheng, senior city officials and ranking representatives of financial market regulators.
Such high-profile political firepower underscores Shanghai's determination to attract global financial heavyweights to the city and turn itself into a global yuan center by 2015 - the goal set forth in the city's 12th Five-Year Plan. That's a major step toward becoming a global financial center by 2020.
Shanghai Vice Mayor Tu Guangshao, who is in charge of financial market supervision in the city, has said Shanghai welcomed major state-owned banks in China to set up secondary headquarters in the city.
China's Big Four banks - Bank of China, the Industrial and Commercial Bank of China, the Agricultural Bank of China and China Construction Bank - are all based in Beijing now. But more major lenders, including China's postal bank and imports and exports bank, are said to be considering setting up Shanghai headquarters.
The People's Bank of China, the central bank, already set up its Shanghai headquarters in 2005 to implement open market operations and conduct market research, while keeping its policy-setting base in Beijing.
Bank of China's new Shanghai headquarters are located on the BOC Tower in Lujiazui, the Pudong area often known as "the Wall Street of China." The BOC Tower is already home to the bank's Shanghai branch. The bank, set up in Shanghai in 1912, will relocate part of its management team to Shanghai from Beijing and hire more staff locally, sources said.
More than lip service
For Bank of China, the new offices are more than simply paying lip service to Shanghai's ambitions. There is a clear rationale for Bank of China to set up its national headquarters for yuan operations in Shanghai, a city perched at the forefront of currency reforms.
Shanghai is already home to the country's sole foreign-exchange trading system, and its stature has been enhanced by China's move to open cross-border trade to yuan-denominated settlements. The country launched its trial of yuan-backed cross-border trade settlement in Shanghai and Guangdong Province in 2009 before it was further expanded nationwide earlier this year.
The city has always been on the frontier of currency reform. The National Development and Reform Commission, China's top economic planning agency, said in January that it envisions Shanghai becoming a leading international financial hub and global center for yuan trading, clearing and pricing by 2015.
It was the first detailed statement on Shanghai's future since the State Council, China's Cabinet, announced in 2009 that turning Shanghai into a global financial hub by 2020 was national policy.
Of course, we are expecting more reforms related to the yuan. The much-discussed international equities board that will allow overseas companies to sell yuan-denominated shares in Shanghai is still in the pipeline. Its launch is uncertain as long as the domestic stock markets remain sluggish.
While a fully convertible yuan, which economists say is the key indicator of a truly global financial center, still seems to be far off, advocates say the policy on yuan cross-border trade settlements was an important step forward.
Drawing card
For Shanghai, the Bank of China's new yuan headquarters has become synonymous with product innovation, heightened market activity and, more importantly, a drawing card for recruitment of top-flight financial professionals.
After all, New York and London are not big financial centers because of the proliferation of their fancy skyscrapers. They have become money hubs because of the quality of the people they employ. (Let's for a second put aside the tales of all those derivatives products that caused the global financial crisis and all of the greedy fat cats garnering big bonuses even after the fiasco.)
As Shanghai sees it, people make a difference. The city wants to attract the caliber of professionals it needs to turn itself into the New York or London of the East.
In the 12th Five-Year Plan, Shanghai has set a goal of 320,000 financial services practitioners in the city by 2015, a rise of almost 40 percent from the current level.
To be sure, Shanghai has already thrived as a magnet for overseas financial institutions. By the end of 2011, more than 1,136 financial institutions had operations in the city, almost double the number at the end of 2005. These institutions include the China subsidiary of HSBC, Citigroup and American International Assurance.
Bank of China is just the start of something bigger. No wonder its opening ceremony in Shanghai drew such rapture from the city's top officials.
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