Bumper financial harvest reaped for the Belt and Road Initiative

As a bridgehead of China’s reform and opening up, Shanghai has firmly grasped the historical opportunity of the Belt and Road initiative and has recorded substantial progress especially in its financial sectors. 

It is now going at full steam to build the city into an investment and financing hub.

Among a slew of stimulus packages, the China (Shanghai) Pilot Free Trade Zone (FTZ) is promoting yuan-denominated financial products in the local bourse to attract overseas investors.

"Shanghai FTZ plans to attract sovereign funds from countries along the Belt and Road regions to invest in onshore yuan-denominated assets," Li Jun, vice director of the Shanghai Financial Service Office, told Shanghai Daily during a media briefing.

"It supports qualified foreign companies to develop and expand its business by making use of China's capital market," Li added.

Encouraged by the policy, Russian aluminum giant UC Rusalan offered one billion yuan (US$145.3 million) worth of seven-year yuan-denominated onshore bonds earlier this year to fund its locally-purchased equipment. It thus became the first company along the Belt and Road route to issue panda bonds on the Shanghai Stock Exchange.

Since then, more international organizations have made similar arrangements, including foreign federal and state governments and overseas non-financial enterprises have issued bonds totaling over 200 billion yuan.

Thanks to its unrivaled competitive edges, Shanghai has managed to lure a number of foreign banks along the route to set up branches. As of August 31, five banks, 13 foreign bank branches and 11 representative offices from 15 countries were set up in Shanghai with total assets of almost 212 billion yuan.

With the opening of Shanghai-Hong Kong Stock Connect for equities and gold as well as the Bond Connect, interconnectivity between the onshore and offshore financial markets has been enhanced.

By the end of August, the Shanghai Gold Exchange had attracted 12 members from the Belt and Road countries, which accounts for about 18 percent of its total international membership.

To expand its financial market, the Shanghai government says it will strengthen bilateral and multilateral cooperation with nations along the region.