Home » Opinion » Foreign Views
City to play crucial financial role
Print Edition
In the coming years, Shanghai’s role in the mainland, regionally and globally will grow in leaps. While critics argue that this is “too much too fast,” they ignore the weight of history.
Shanghai was ready for its future in the 1930s, had it not been for colonialism, Japanese invasion and World War II. During the pre-reform decades, Shanghai also waited for its turn. In the reform era, again, Shanghai had to wait a decade longer.
And in the past decade of global integration, the megacity’s financial district Lujiazui could only watch as Hong Kong served as the mainland’s financial intermediary.
So it is not the case that Shanghai is too impatient. Rather, the megacity has been extraordinarily patient.
Like Hong Kong and Singapore, Shanghai suffered immensely under colonialism. But unlike those two metropolises, Shanghai also had to wait far longer to fully participate in global economic integration.
In the 1920s, Shanghai was still the center of international trade and finance in East Asia. The position of the “Pearl of the Orient” eroded only with the turmoil of the 1930s.
After World War II and the Civil War in China, most foreign firms moved their offices from Shanghai to Hong Kong. Meanwhile, the megacity was transformed into an industrial center. In China, Shanghai was the largest contributor of tax revenue to the central government, but at the cost of crippling its own infrastructure and capital development.
Winds of change
Change came slow to Shanghai. The first decade of reforms and opening-up policies began in southern China. The development of Pudong New Area was initiated only in 1992 to restore Shanghai’s historical role for the Yangtze River Delta and to China. Even as China joined the World Trade Organization in 2001 and international trade soared, Hong Kong still enjoyed an extraordinary decade as the financial lifeline of the mainland.
The winds of change arrived in March 2009, when the State Council approved Shanghai’s plans to forge itself into one of the world’s leading financial, trade and shipping centers by 2020. Only a month later, Shanghai also got the nod from the central government to use the yuan in overseas trade settlement.
Last January, the newly elected mayor of Shanghai Yang Xiong unveiled Shanghai’s plan to develop the mainland’s first free-trade zone, starting in the Yangshan deep-water port, Pudong International Airport and Waigaoqiao.
In the past, Beijing has approved over a dozen bonded areas, which are prototypes of free-trade zones. But a more extensive zone in Shanghai could bypass that of Hong Kong over time.
Financial reforms
The new Chinese leadership believes it is easier to achieve greater equity through economic growth, supported by the financial sector.
But change never comes easy.
For over half a decade, China’s equity, bond, and currency markets have expanded significantly.
Now is the time for new reforms to allow commercial banks to grow their lending, to expand the fragmented bond market, to move gradually toward the securitization of loan portfolios, and to open doors to foreign investors and financial institutions.
Most importantly, Shanghai will have a crucial role to play as China moves from investment and net exports toward consumption.
The mainland’s new growth model requires more sophisticated financial services, which, in turn, can support more sustainable economic growth, inclusive growth and social support to ordinary Chinese.
As China’s tallest skyscraper Shanghai Tower will soon take spotlight in Pudong New Area, the megacity is in a hurry. Its defining moment has come.
Dr Dan Steinbock is Research Director of International Business at India China and America Institute (USA) and visiting fellow at tje Shanghai Institutes for International Studies (China) and the EU Center (Singapore). Shanghai Daily condensed the article.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
