Shanghai will accelerate opening up in financial services to build an international financial center and serve the Belt and Road initiative, authorities told the Lujiazui Forum yesterday.
Zhou Xiaochuan, governor of the People's Bank of China, said the Cross-border Interbank Payment System will soon be launched in Shanghai to help internationalization of the yuan and construction of the initiative.
The system provides clearing and payment services for financial institutions in the cross-border and offshore yuan business, and the first phase started in 2015 to mainly deal with trade, direct investment and financing businesses.
The second phase is expected to adopt a more comprehensive clearing method to lift operational efficiency.
"The Belt and Road initiative offers new opportunities for the opening up of China's financial industries," Zhou said. "Its construction also offers room for development for financial institutions to expand their overseas footprint and trade and investment operations."
Zhou said the move shows the bank's support for Shanghai's ambition to become an international financial center by 2020.
Proposed by President Xi Jinping in 2013, the Belt and Road initiative aims to build a trade and infrastructure network connecting Asia with Europe and Africa along and beyond the ancient Silk Road trade routes.
Zhou said the financial services sector is a competitive industry and further opening up is necessary to clean up irregularities and enhance the competitiveness of local institutions.
China's financial sector will benefit from opening up just as manufacturing industries did in past decades, he said.
"China's regional experiment has enhanced confidence in opening up," Zhou said. "The government has solidly driven trials in Shanghai's free trade zone. There were different voices at the beginning, but now the number of pilot zones has expanded to 11 and many experiences were rolled out nationwide. That shows everyone has seen the benefits of opening up."
Shanghai Mayor Ying Yong said the city will actively drive internationalization of the yuan, implement financial reforms in the free trade zone, accelerate building an internationally oriented financial system, build a global yuan services system, and steadily drive trials for yuan convertibility under the capital account.
"The next few years is the sprint stage in Shanghai's construction of an international financial center," Ying said. "Shanghai will continue to push deep coordination between the free trade zone and international financial center construction, and drive financial opening up to greater depth under controllable risks."
Added-value from the financial services industry contributed 17 percent of Shanghai's GDP last year, making it a pillar industry for the city's economy, Ying said.
He said Shanghai will also accelerate innovation through stronger financing of small technology companies and will seek cooperation with financial institutions in Belt and Road countries to build itself as an important link in cross-border allocation of financial resources.
Jiang Yang, vice chairman of the China Securities Regulatory Commission, said it will encourage long-term institutional investors to invest in the domestic market and "actively" facilitate Belt and Road companies to issue yuan-denominated bonds in Hong Kong.
He said the Shanghai stock exchange has set up deals with the Kazakhstan stock exchange and will participate in its efforts to build the Astana International Financial Center.
The forum, whose theme is "Financial Reform and Steady Development from a Global Perspective," ends today.