China inaugurates central bank Shanghai headquarters

China's central bank inaugurated its second headquarters in Shanghai Wednesday to improve its capability of regulating the country's financial market, the economy, and help turn the city into a world-class banking center.

Zhou Xiaochuan, governor of the People's Bank of China (PBC), the central bank, said the Shanghai headquarters was designed to help the bank better perform its functions in regulating the Chinese financial market and improving its services for Shanghai as the country's financial hub.

"Under the current situation, the PBC's existing structure cannot cope with the needs of China's economic development," he said.

The ever-increasing role of the market in China's economic growth, and technological progress and improved communications and transportation are having a subtle impact on the national economy and finance, which calls for the central bank to better its capability and services, he said.

To better perform its duty of executing monetary policies, regulating the economy and financial market and promoting financial stability, Zhou said, it is natural for the central bank to set up Shanghai headquarters and conduct various businesses on the country's financial hub in Shanghai.

He said a financial center with powerful capabilities is also essential to the country's international competitiveness.

Han Zheng, mayor of Shanghai, hailed the move as a milestone of China's efforts to turn his city into an international financial center.

Xiang Junbo, deputy governor of the central bank and also head of the Shanghai headquarters, also described the move as crucial in stepping up the efforts to turn Shanghai into an international financial center.

Chinese President Hu Jintao announced last year to build Shanghai into an international economic, financial, trade and shipping center.

Based on the Shanghai branch of the central bank, the second central bank headquarters is an institution at the vice-ministerial level. It will operate under the leadership of the Beijing-based headquarters.

The functions of the Shanghai headquarters have been defined, the central bank noted, adding that it will serve as a platform to execute the central bank's monetary policy, monitor and manage the financial market, and as a vital platform to engage in foreign exchanges.

The Shanghai headquarters will be commissioned to regulate the financial market, collect and analyze financial information, develop and market financial products, and coordinate regional financial cooperation, the bank said in a statement.

The central bank will shift some departments of the central bank whose businesses are closely related to the market to the eastern China metropolis.

Officials in Shanghai said the second headquarters will perform the central bank's executive functions, while the policy making function will remain with the Beijing headquarters.

The central bank's Shanghai headquarters will be composed of 16-18 departments or centers with the staff to be enlarged to some 700 within three years.

The headquarters will be located in financial area of Lujiazui in Shanghai's Pudong New District. The Shanghai Branch of the central bank will remain, and the new headquarters will be separated from it.

Shanghai has long been deemed as the financial center of China since a lot of leading Chinese financial institutions, such as China's foreign

exchange market, the interbank lending market, the gold market, the diamond market as well as the Shanghai Stock Exchange, are located in the municipality.

At the end of last year, Shanghai had 300 financial institutions and more than 10 percent of the market share went to foreign investors.

To further improve the central bank's management, Zhou said previously that the central bank would possibly transfer some of its nationwide businesses, such as payment and liquidation as well as a consulting system for national credit information, to Shanghai and hence set up the second headquarters there.

Analysts say the second headquarters will draw the central bank closer to the financial market.

Lu Wenlei, an expert with Shenyin & Wanguo Securities Co., said the second central bank headquarters help optimize the country's financial regulation, improve its efficiency of executing monetary policy, reinforce Shanghai's position as the national financial hub, and turn the city into an international banking center.

Shanghai has been home to China's leading markets for money trading, stocks, foreign exchange transaction, and other financial products.

Source: Xinhua