The disastrous effects that the US financial crisis had have demonstrated to China as well as the whole world the necessity and urgency for the establishment of a diversified international monetary and financial system. In this situation, it is particularly urgent and important to develop Shanghai into an international financial center.
China has signed bilateral currency swap deals with several countries and regions around the world since December 2008, in order to accelerate, at the base level, the process of internationalization of the renminbi. The State Council has recently approved the proposal to promote Shanghai as an international financial center and shipping center. It is the first time that developing Shanghai into an international financial center has been planned and arranged as part of a national strategy.
In the history of the world economy, international financial centers, which are in dominant positions of economic and financial development as well as being centers for resource pricing and allocation, have always been the focus of the world's economic and financial competition.
Although an international financial center is more of an economic phenomenon from the perspective of results, the process of its establishment and development also extensively involves many fields. These include international political relations, comparison of overall national strength, economic and legal systems as well as historical and geographical factors. Shanghai, with its unique all-round advantages, has always been regarded as having the most possibility to become a regional financial center in the Asia-Pacific area, or even a global financial center.
The acceleration of the renminbi's internationalization is not only a rare opportunity for Shanghai to build itself to be an international financial center; it is also a serious challenge. Although Shanghai has unique advantages in terms of the richness of capital resources, the convenience of supervision over renminbi and the wide spectrum of financial services, currently, the opening-up, the depth and the maturity of the RMB market in Shanghai is still far from satisfactory.
Shanghai needs to seize this global historic opportunity, fully realize its own practical problems in the construction of an international financial center, including its bottlenecks and shortcomings, and bring into full play its existing advantages. In addition, Shanghai needs to rely on the Chinese economy's quick rise to power as its fundamental support, treat serving both the real economy and the Chinese economy as the fundamental starting point, regard renminbi internationalization operations as a focus for the development of the international financial center, actively create favorable conditions to become a center for both international renminbi settlements and transactions as soon as possible, and speed up the establishment in Shanghai of an interrelated renminbi international settlement system and supervision system for domestic and overseas (off-shore) activities. These efforts will be breakthroughs in the construction of an international financial center in Shanghai. At the same time, efforts need to be made to create favorable conditions to actively develop a renminbi market, a bond market, a stock market and a futures market, all of which are supervised and interconnected in a centralized manner, and seek the interactive development of the four markets. In particular, emphasis should be placed on enhancing services provided to current emerging money market investment funds, thereby making Shanghai the main battlefield in the development of renminbi market funds.
Speeding up the construction of the Shanghai international financial center is not only a national strategy to cope with the financial crisis, promote the national competitiveness and realize the transformation from a manufacturing power and a trade power into a global financial power, it is a historic mission handed to Shanghai by the state. The municipal government of Shanghai and various departments under the Central Government should join hands in speeding up the construction of various hardware and software systems related to the Shanghai international financial center, including a legal regime, a multi-tier, multi-variety market system, a financial institution system, a financial human resources system and a multifunction system intended for providing matching financial services, thereby creating favorable internal and external conditions for the formation and development of the Shanghai international financial center.
At the same time, Shanghai should further improve the service function of its government. Shanghai, while actively inviting all types of financial institutions from home and abroad into the city, should make the best of information and network techniques, drive service innovation and continue to strengthen the spectrum of financial services, so as to quicken the pace of realizing financial integration in the Yangtze River Delta region, enlarge financial service space and open up more service fields in the Yangtze River Delta region, the Yangtze Basin and even the whole country as well as provide more complete financial services for domestic and overseas customers.
By People's Daily special commentator, who is also professor at the School of Economics and Management, Tongji University
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