Shanghai’s fu­ture mapped out in NYC

China Daily (USA) - - ACROSS AMERICA - By HONG XIAO in New York xi­ao­hong@chi­nadai­lyusa.com

If any city in the world knows about change, it’s Shanghai. But it could be just get­ting started.

Shanghai is ac­cel­er­at­ing its build­ing of an in­ter­na­tional fi­nan­cial cen­ter and devel­op­ment of the Free Trade Zone in ac­cor­dance with na­tional strat­egy, ex­perts say.

The city is also cre­at­ing it­self as an in­no­va­tion cen­ter with global in­flu­ence, as­sist­ing the restruc­tur­ing of China’s econ­omy.

Chi­nese of­fi­cials and US fi­nan­cial ex­perts gath­ered in New York for the Shanghai Fi­nan­cial In­no­va­tion Fo­rum at the Thom­son Reuters build­ing on Oct 14 to talk about ways to ex­pand Shanghai’s role as a hub for fi­nan­cial in­no­va­tion.

Wu Jun, deputy di­rec­tor gen­eral of Shanghai’s mu­nic­i­pal fi­nan­cial ser­vices of­fice, said there was still a large gap be­tween Shanghai as a de­vel­op­ing in­ter­na­tional fi­nan­cial hub, and New York, in terms of the de­mands of mar­ke­ti­za­tion, in­ter­na­tion­al­iza­tion and le­gal­iza­tion.

Fur­ther im­prove­ment de­mands more ef­fort from the as­pects of fa­cil­i­tat­ing the cross-bor­der use of RMB and taking ad­van­tage of the China (Shanghai) Pi­lot Free Trade Zone (FTZ), he said.

Ac­cord­ing to the Xin­hua-Dow Jones In­ter­na­tional Fi­nan­cial Cen­ters Devel­op­ment In­dex (IFCD In­dex), Shanghai ranks No 6 and New York No 1 in 2013 and 2014 con­sec­u­tively, an in­di­ca­tion that Shanghai has made great progress but still has long way to go, Wu said.

In the first eight months of 2016, the to­tal amount of Shanghai’s cross­bor­der set­tle­ment RMB equaled $1.5 tril­lion, Wu added, and the RMB con­tin­ued to main­tain its po­si­tion as the fifth-most im­por­tant pay­ment cur­rency, its mar­ket share reach­ing 1.86 per­cent in August.

Wang Xinkui, chair­man and pres­i­dent of Shanghai Af­fairs Con­sul­ta­tion Cen­ter, said the es­tab­lish­ment of the Pi­lot FTZ three years ago marked a new stage in China’s open­ing up.

By draw­ing upon the ex­pe­ri­ences of the pre­vi­ous three years, Wang sug­gested that China’s Pi­lot FTZ fo­cus on re­solv­ing ma­jor prob­lems like the con­tra­dic­tions be­tween the ad­min­is­tra­tion mode of us­ing the zone as a spe­cial con­trol and the prac­ti­cal needs of ex­pand­ing and open­ing up to the out­side world in the ser­vices in­dus­try.

On Oct 1, the RMB be­came a mem­ber of the In­ter­na­tional Mon­e­tary Fund (IMF) Spe­cial Draw­ing Rights (SDR) bas­ket and ac­counts for 10.92 per­cent of the bas­ket, fol­low­ing the US dol­lar’s 41.73 per­cent and the euro’s 30.93 per­cent.

Eswar Prasad, se­nior professor of trade pol­icy at Cor­nell Univer­sity and for­mer head of the IMF’s China di­vi­sion, talked about the po­ten­tial do­mes­tic and global im­pact of the in­ter­na­tion­al­iza­tion of the RMB in con­nec­tion with his new book, Gain­ing Cur­rency: The Rise of the Ren­minbi (Ox­ford Univer­sity Press, 2016).

“Over the next few years, the RMB’s ris­ing im­por­tance in in­ter­na­tional fi­nance could well serve as a cat­a­lyst for do­mes­tic re­forms and also help in im­prov­ing the sta­bil­ity of the in­ter­na­tional fi­nan­cial sys­tem,” he said.

Prasad said that the key chal­lenge that China now faces in pro­mot­ing its cur­rency’s in­ter­na­tional role is that it needs wellde­vel­oped and bet­ter-reg­u­lated fi­nan­cial mar­kets.

He said the Chi­nese gov­ern­ment is taking some of the nec­es­sary steps, try­ing to de­velop and strengthen its cor­po­rate and gov­ern­ment bond mar­kets, while also giv­ing foreign in­vestors eas­ier ac­cess to such in­stru­ments.

HONG XIAO / CHINA DAILY

Eswar Prasad, professor of trade pol­icy at Cor­nell Univer­sity and for­mer head of the IMF’s China di­vi­sion, speaks at the Shanghai Fi­nan­cial In­no­va­tion Fo­rum, at the Thom­son Reuters build­ing in New York on Oct 14.

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