Shanghai has a long way to go before it can claim to be a global financial centre, says European business group

Only removal of capital controls and renminbi convertibility can help Shanghai claim title of international financial centre, says Thilo L. Zimmermann of European Union Chamber of Commerce in China

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Shanghai is China’s top financial centre. In March 2009, the government set a goal to establish the city as an global financial centre by 2020. Photo: Xinhua

Published: 8:19pm, 13 Dec 2019Updated: 9:24pm, 13 Dec 2019

Strict capital controls, lack of yuan convertibility and ongoing regulatory issues pose a serious threat to the Chinese government’s stated goal of turning Shanghai into a global financial centre by 2020, according to the European Union Chamber of Commerce in China.

A study by the chamber found that almost nine out of 10 members felt Shanghai’s banking and finance market was too regulated compared to other international financial centres, and that has hindered their growth in the mainland.

“Only removal of capital controls and renminbi convertibility can bestow the title of international financial centre upon Shanghai,” said Thilo L. Zimmermann, vice-chairman of the chamber’s banking and securities committee.

In the past few years, Chinese authorities have taken a slew of measures and reforms to open up the country’s economy and boost Shanghai’s appeal. These include removing ownership caps on futures, securities and fund management companies, launching the London-Shanghai Stock Connect and allowing foreign rating agencies to operate in the domestic market.

However, the chamber has called for more practical details and support for foreign financial institutions to ease their entry into the market.

In March 2009, the State Council, China’s cabinet, set a goal to establish Shanghai as an global financial centre by 2020.