Shanghai vice-mayor Zhao Qizheng says he is optimistic some foreign banks will be able to do business in renminbi within a year. 'The final timetable would be announced by the People's Bank of China [PBOC], but I think this would happen soon,' he said. 'I do not mean in three, four or five years' time, but I am hopeful this could possibly happen within a year.' Shanghai, he said, had laid the groundwork for the event and banks would be chosen on the basis of their business performance and scale. PBOC deputy governor Chen Yuan recently confirmed, without giving a timetable, that when the go-ahead was given, banks in Pudong in eastern Shanghai would be the first in the country to be given yuan licenses. China wants to turn Pudong into a financial and business hub but few large banks and corporations are willing to relocate there because of poor infrastructure. Shanghai is trying to lure more banks, however, by allowing them to set up sub-branches if they have operations in Pudong and to do yuan business later when approval is granted. About 10 foreign banks have applied to set up sub-branches in Pudong, but foreign bankers reckon that no more than five would eventually be given yuan licences. There are 40 foreign bank branches at present in Shanghai, a quarter of China's total. These branches have a capital base of US$10 billion - half of the national total. Mr Zhao said more measures would be announced in the next few months to encourage corporations to relocate in Pudong to help fill up the excess office space. 'Some people feel there is excessive building in Pudong, but I think this has not reached a dangerous level.' Mr Zhao said apart from the Shanghai Stock Exchange, leading commodity exchanges would be encouraged to relocate from Puxi (the old city centre) to Pudong. The Shanghai Foreign Economic and Trade Commission and the Shanghai Housing Bureau would also move there, he said. 'We would also like to have the China headquarters of foreign corporations to set up in Pudong,' and new special incentives would be given to lure them, he said. Mr Zhao said once infrastructure problems were less serious, more foreign investors would relocate in Pudong, a zone actively promoted by the central authorities to aid development in the Yangtze River Basin. He said about 25-35 per cent of foreign investment in Shanghai went to Pudong. 'The portion will go up over the years, as the transport links between Pudong and Puxi are strengthened.' By the end of last month, Pudong had attracted 4,000 Sino-foreign joint ventures with overall investment of US$16.4 billion yuan. The foreign share amounted to US$10.6 billion. READY TO MOVE IN Vice-mayor says decision expected within year Banks to be chosen on performance and scale
