Shanghai must become a global financial centre, report says

East China megacity needs to step up as uncertainties grow over Hong Kong’s status due to rising US-China tensions, according to research by Renmin University

Long-term goal is to make Shanghai a financial hub like New York or London, report says

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Shanghai should accelerate its development as a global financial centre, a report says. Photo: Xinhua

Published: 6:53pm, 25 Jul 2020Updated: 10:56pm, 26 Jul 2020

The escalating tensions between China and the United States and related uncertainty over Hong Kong makes the development of Shanghai as an international financial centre more urgent than ever, according to a new report.

While the long-term goal is to make the east China megacity into a financial hub like New York, London or Hong Kong, the study by Renmin University of China said Shanghai should prioritise building a global yuan asset management and pricing centre, and increasing its financial allocation ability when future national growth focuses on the domestic market.

“The external environment for China and yuan internationalisation is tense and changes a lot,” according to the report, which was released at the International Monetary Forum in Beijing on Saturday.

“International entities have a strong reliance on major currencies, which makes it hard [for the yuan] to make a breakthrough. As economic downward pressure and global financial turmoil intensify, the monopolistic position of the US dollar will be further consolidated,” it said.

While the process of achieving a status for the yuan commensurate with China’s economic influence would be long and convoluted, the relevant authorities should use the construction of an international financial centre as an opportunity to herald China’s high-quality growth and high-level opening, it said.

The escalating tension between the world’s two largest economies – as seen by the tit-for-tat closure of consulates this week – has increased the need to make Shanghai an international financial centre, especially after the introduction of a national security law in Hong Kong, which has clouded its future.