Opening up raises financing
Qingdao’s global ranking has improved by 33 places in six months, and the wealth management industry has nearly doubled in 2016, Zhuan Ti reports.
Qingdao, a coastal city in East China’s Shandong province, recently earned a place among China’s international financial hubs, two years after its plan to build a wealth management pilot zone received central government approval.
According to the Global Financial Centres Index published in September, Qingdao ranked fourth on the Chinese mainland, behind the first-tier cities of Beijing, Shanghai and Shenzhen.
The GFCI report was produced by Z/Yen Group, a London-based market research company. It evaluates major global financial centers in terms of their competitiveness.
According to April’s report, Qingdao ranked 79th among the 87 global financial center cities. After half a year, it ranked 46th globally and 15th in Asia. Its global ranking increased 33 places in six months, the fastest growth among all the cities on the list.
Since February 2014 when the city’s wealth management pilot zone plan was approved by the central government, Qingdao has made great strides in developing its financial businesses.
Statistics from Qingdao Financial Affairs Office show that at the end of 2015, the scale of the city’s wealth management business reached 681.62 billion yuan ($101 billion), growing almost 96 percent since the inauguration of the pilot zone.
In the first half of 2016, Qingdao’s new loan balance hit a record high of 100 billion yuan.
The total of both renminbi and foreign-currency loans reached 1.26 trillion yuan, an increase of 107.04 billion yuan from the beginning of 2016, higher than the average level in Shandong province for seven months in a row.
Besides the rapid increase in lending and other financial operations, the structure of investment has also been optimized.
“I used to choose real estate as my major investment focus, but the booming growth and diversification of Qingdao’s financial business has changed my decision,” said Xiao Shengliang, a local professional investor.
“From banking to trust investment, from secondary market investment to equity projects, we can avoid risk through various methods, and no longer overly rely on the uncertain real estate market,” he explained.
Lying on the southern coast of the Shandong Peninsula, Qingdao boasts a friendly environment, an advantageous location and a solid real economy for developing its financial industry.
When attending the 2016 China Wealth Forum in the city in June, former French prime minister Dominique de Villepin said that Qingdao, as a harbor city, has an open economy and geographic advantages, which are attractive to businesses from Japan, South Korea and other economies worldwide.
He said Qingdao’s financial industry has great potential in many aspects, noting that the city’s growing number of hightech and manufacturing companies and myriad of small and medium-sized enterprises have huge demand for financial services.
According to the Qingdao Financial Affairs Office, the city’s financial industry, focusing on wealth management, can play an important role in connecting investors and the real economy in Qingdao, as well as Shandong province.
The office said the total savings balance in Shandong’s financial institutions reached 8 trillion yuan by the end of June, because residents lack effective means for investment. On the other hand, local businesses, especially SMEs, lack funds because of limited channels for fundraising.
The office said Qingdao has built a solid real economy by cultivating some well-known brands such as Haier Group, Hisense and Tsingtao Brewery. The prosperity of these companies is closely related to support from local financial businesses, which offer tailored, innovative services to help enterprises to grow.
Qingdao’s financial industry is also opening wider to the world, according to the Qingdao Financial Affairs Office.
As a coastal city neighboring South Korea, Qingdao has made breakthroughs in crossborder financial services with the country.
It is the first city in China to allow Chinese companies to borrow renminbi from banks in South Korea, according to the Qingdao Financial Affairs Office.
“Last July, we borrowed 2 million yuan worth of crossborder loans from Hana Bank in South Korea through the Bank of Qingdao, which solved our pressing need for funds,” said an executive at Sinopal, a local company.
The city has also opened its financial market to foreign businesses.
For instance, Italy’s banking group Intesa Sanpaolo and its two branch companies were recently approved to establish a wealth management company in Qingdao by the European Central Bank and Banca d’Italia, Italy’s central bank.
The new company completed business registration in Qingdao on Sept 30, becoming the first wholly foreign-owned wealth management company in China.