Shanghai moves to open up financial sector

14 Feb 2020

On 14 February 2020, China’s main financial authorities – together with the Shanghai government – unveiled a guideline (Yin Fa [2020] No.46 with 30 measures to speed up establishing Shanghai as an international financial center. The guideline aims to introduce new financial policies in the Lingang New Area of Shanghai’s Pilot Free Trade Zone, accelerate the openness of Shanghai’s financial sector, and boost the integrated development of the Yangtze River Delta. Key points include: - Eligible commercial banks will be allowed to set up financial asset investment companies in Shanghai. Such financial asset investment companies will be able to establish specialized investment subsidiaries in the city to invest in equities of key programs in the Lingang New Area and the Yangtze River Delta. Financial institutions and large technological enterprises will be encouraged to start or invest in fintech companies in the Lingang New Area to explore the application of new technologies, such as artificial intelligence, big data, cloud computing, and blockchain in the financial sector. For qualified enterprises in the Lingang New Areas, banks may directly handle the RMB settlement in cross-border trade. The cross-border RMB income obtained from foreign direct investment, cross-border financing, and overseas listing may also be directly used for payment within China. - Selected foreign institutions can partner with large commercial banks to set up wealth management joint ventures in Shanghai, according to the guideline. Foreign companies will be supported to set up wholly foreign-owned life insurance firms and establish or control securities brokerages and fund management firms in Shanghai. Mature overseas financial institutions can be approved in investing and holding shares in pension management companies in the city. Multinational corporations are encouraged to set up global or regional fund management centers in Shanghai. The fund management center may, upon approval, trade in the inter-bank foreign exchange market. Moreover, to promote Shanghai as the center for RMB financial assets configuration and risk management, the guideline also calls for further opening-up of the bond market, facilitating the registration process for overseas investors, and developing foreign exchange derivatives, including the RMB interest rate options.

Nature of measure:

• Liberalization
• Facilitation

Type:

• Entry and establishment (Approval and admission - other)
• Promotion and facilitation (Investment facilitation )

Industry:

• Services (Financial and insurance activities)

Sources:

• The State Council, 中国人民银行 中国银行保险监督管理委员会 中国证券监督管理委员会 国家外汇管理局 上海市人民政府关于进一步加快推进上海国际金融中心建设和金融支持长三角一体化发展的意见, http://www.gov.cn/zhengce/zhengceku/2020-02/14/content_5478985.htm, 14 Feb 2020
• China Briefing, Shanghai Moves to Attract Foreign Investment, Open Up China’s Financial Sector, https://www.china-briefing.com/news/shanghai-moves-attract-foreign-investment-open-chinas-financial-sector/?hilite=%27Shanghai%27%2C%27Moves%27%2C%27Attract%27%2C%27Foreign%27%2C%27Investment%27, 10 Mar 2020