Chinese capital controls mean Shanghai is not a global financial hub, US bankers say

AmCham survey finds capital controls cripple Shanghai’s ambition of becoming financial hub

The plan was announced in 2009, when Shanghai officials pledged it would be on an equal footing to New York, London and Hong Kong by next year’s deadline

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Tourists on a ferry crossing the Huangpu River view the Shanghai Tower and other buildings in the Lujiazui financial district in Shanghai, China. Photo: Bloomberg

Published: 9:30pm, 4 Apr 2019Updated: 1:07am, 5 Apr 2019

Shanghai has fallen short of its ambitious goal of becoming a fully-fledged international financial centre by 2020, according to a survey by the American Chamber of Commerce in Shanghai.

The plan was announced in 2009, when Shanghai officials pledged it would be on an equal footing to New York, London and Hong Kong by next year’s deadline.

As the deadline grows nearer, however, the city remains largely a commercial and shipping capital. Restrictions on the movement of capital in and out of China have scuppered ambitions to become an international money market, with US bankers saying that it is still another five to 10 years from regaining its pre-Communist era status as the financial capital of the East.

More than half of 26 financial industry executives recently surveyed by AmCham Shanghai said that the city has struggled to find a balance between serving as a loyal base for the Communist Party and offering a safe haven for global capitalists.

The skyline seen from the street at the Lujiazui financial district in Pudong, Shanghai, China. Photo: Reuters

According to the survey released on Thursday, China’s strict control of capital flows, heavy government intervention in financial markets, and the limited use of the yuan in international markets have restricted Shanghai’s role as a financial hub.

While the city has made progress in certain areas over the last decade, including a link-up with the Hong Kong stock exchange, there are considerable barriers that need to be lifted, according to the financial professionals who responded to the survey.