At least 122 foreign asset management companies from 13 countries have set up operations in the Lujiazui financial hub in Shanghai. Of the 1,736 licensed financial institutions registered in the city, 539 are foreign financial service providers. Nearly half of the foreign banks, jointly-held asset management companies and foreign insurance companies operating in China have set up regional headquarters in Shanghai. Many initial attempts to facilitate the two-way opening-up of the Chinese financial market have been made in Shanghai. Crude oil futures, China’s first yuan-denominated futures product open to foreign investors, was launched at the Shanghai Futures Exchange in 2018. The Stock Connect program linking the Shanghai and London bourses began in June the following year. JP Morgan, whose China headquarters are located in Shanghai, was given approval in August 2021 to set up the first wholly foreign-owned securities company in China, and in late March, China’s national oil company CNOOC and France’s TotalEnergies settled the first yuan-denominated trade for liquefied natural gas (LNG) on the Shanghai Petroleum and Natural Gas Exchange.
French banking group BNP Paribas is continuing to invest in China. It has placed CNY5.3 billion of additional equity in its China joint ventures over the past 18 months, and expects to make a further investment of CNY1.5 billion to CNY2 billion in the next 12 months. Bruno Weill, the bank’s Vice Chairman in China, said that in the next two months, BNP Paribas will unveil a wealth management joint venture with Agriculture Bank of China (ABC). The company has founded 11 joint ventures with Chinese partners, including state-owned enterprises (SOEs), privately-owned companies and financial institutions.
Meanwhile, the China (Shanghai) Pilot Free Trade Zone, which was officially launched in 2013 and underwent expansion in 2015 and 2019, serves as one of the best examples of systematic innovation. The negative list for foreign investment, first adopted by the Shanghai FTZ when it was launched, was promoted nationwide in July 2017. In early March, the Ministry of Commerce (MOFCOM) said efforts are being made to trim the national negative list to further relax the limit on foreign capital in certain areas. The free trade account, first introduced at the Shanghai FTZ in June 2014, has brought increased convenience to companies’ cross-border financial businesses, nurturing new business models.
In February last year, textile exporter Orient International Enterprise launched Shanghai’s first offshore processing trade business, in which purchased raw materials are directly shipped to the company’s overseas production base and delivered to overseas end users when production is completed. This process saves the cost of exporting the completed products from domestic facilities. Xu Lan, Deputy General Manager of the Transaction Banking Department at Bank of China (BOC) in Shanghai, which has provided related services to Orient International, said such progress has been made possible by the free trade account’s offshore economic and trade policies. The settlement and exchange services provided by the account have largely enhanced overall efficiency, Xu said.
The Lingang Special Area, part of the Shanghai FTZ that was officially launched in August 2019, is another good example of Shanghai’s advanced two-way opening-up. Gu Jun, Director of the Shanghai Municipal Development and Reform Commission, said that in recent years Lingang has formed a systematic opening-up mechanism featuring freedom of trade, investment, capital flow, transportation and employment, as well as the rapid connection of information. NEV firm Tesla has benefited from the systematic advantages in Lingang. It held the groundbreaking ceremony for its Lingang gigafactory in early January 2019, and the first car was completed at this facility 11 months later, the China Daily reports.