Honorable Vice Premier Liu He, Secretary Li Qiang, Mayor Gong Zheng,
Ladies and Gentlemen,
During General Secretary Xi Jinping’s inspection tour in Shanghai last November, he noted that Shanghai should “strengthen its function of allocating global resources and actively allocate global resources, including capital, information, technology, talents and goods”, which pointed out the direction for the development of Shanghai as an international financial center. The address by Vice Premier Liu He is very important and greatly instructive for our financial work. I also fully agree with the discourse Secretary Li Qiang has just made in his address on accelerating the building of Shanghai as an international financial center.
At the previous Lujiazui Forum, I proposed the “Five Centers” that we should focus on in building Shanghai as an international financial center. Here, I would like to further discuss the “Five Centers” with you.
First, Shanghai is becoming a center for RMB-denominated asset allocation. That is to say, when world-class investors plan to invest in RMB-denominated assets, they will regard Shanghai as their first choice. Global institutional investors can conveniently conduct cross-border investment and financing activities here. Notably, China’s economic fundamentals remain sound, with monetary policy within the normal range. The RMB interest rates are at the lowest level among developing countries, but there is a relatively remarkable positive spread compared with the interest rates of major convertible currencies. In this sense, RMB-denominated assets are fairly attractive for global capital allocation.
Second, Shanghai is becoming a center for risk management of RMB-denominated financial assets. After investing in RMB-denominated assets, investors, domestic and abroad, are bound to diversify and manage their risks on a continuous basis. In Shanghai, all factors related to risk management are improving. First, in terms of pricing, continuous pricing has been realized for all classes of RMB-denominated assets. Second, in terms of transaction, the RMB financial market enjoys adequate liquidity as well as sound depth and width, allowing buy-in and sell-out at any time. Third, in terms of risk hedging, a basket of relatively complete risk management tools, including financial futures, commodity futures, interest rate derivatives, and foreign exchange derivatives, is in place to support effective risk hedging. Fourth, in terms of information disclosure, the increasingly enhanced transparency and stringent requirements for information disclosure in recent years continuously boost investors’ confidence in RMB-denominated assets. With the above four factors of risk management, investors are able to manage and diversify risks in a more effective way.
Third, Shanghai is becoming a center for financial opening-up. The world’s international financial centers must be open, as opening-up is a prerequisite for attracting first-class financial institutions and financial talents. In recent years, Shanghai has picked up its pace in financial opening-up, with a host of world-renowned financial institutions setting up offices in the city one after another, and the city has become much more attractive to top financial talents worldwide. In the meantime, financial regulation capacity should be adaptive to and compatible with the level of financial opening-up. Ensuring financial security amid financial opening-up brings about true security.
Fourth, Shanghai is becoming a demonstration center for high-quality business environment. A market-oriented, law-based and internationalized business environment is gradually taking shape in Shanghai. As professional institutions, such as financial courts and financial arbitration agencies, have been established in succession, Shanghai has become the best proving ground for innovative financial operation rules and standards. In its development as an international financial center, Shanghai can further pioneer the capital account convertibility and the facilitation of RMB as a freely usable currency. As long as the regulation requirements for combating money laundering, terrorist financing and tax evasion are met, funds for normal trade and investment activities can flow into and out of Shanghai freely.
Fifth, Shanghai is becoming a Fintech center. As Fintech is indispensable for the…
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