Trade conflict with US offers chance to further globalize Chinese financial markets

German-based industrial machinery maker KraussMaffei Group is scheduled to list in the Shanghai Stock Exchange by the end of the year, German magazine Euro am Sonntag reported. If listed, KraussMaffei will be the first German company traded on the Chinese mainland stock market.

China now has thousands of companies listed in the country’s domestic A-share market, but almost none of them are Europe-based large multinational companies. Although China has become the world’s second-largest economy, it seems the country still has a long way to go in making itself an international financial center. KraussMaffei’s possible listing in Shanghai is a symbolic yet important step in showing that China’s stock market is about to go global.

The possible listing is actually the result of measures to further open China’s financial services market. While ramping up efforts to make it more accessible to foreign investors by allowing more overseas individuals to open A-share accounts, China’s stock market is now financially more attractive for Western companies to be listed on.

In China, companies are required to pass rigorous screening in order to be listed on the domestic stock market. Western companies’ listings won’t lead to economic chaos, but will bring new challenges as China pursues some rule changes to facilitate foreign enterprises’ financing in China’s stock market.

However, China is expected to adopt an open mind and to hope it can attract more excellent foreign enterprises to list on its stock markets, because it’s an indispensable step in the country’s financial opening-up.

China needs to continue to open its financial market to increase its global competitiveness. Much remains to be done to make China’s A-share market a gathering place for Western companies and pave the way for domestic listings of China’s overseas-listed enterprises.

As the trade conflict between China and the US profoundly reshapes the current economic order and the global industrial chain, some foreign companies are keen to increase their direct exposure to the world’s secondlargest economy.

The China-US trade conflict is perhaps a chance for China to pursue greater global recognition of its financial markets, and China should seize this opportunity.