Strong for Shanghai as an international financial center

Huang Yixuan
Shanghai is showing steady development in its international financial capacity, with the city's latest Financial Climate Index rising 6.8 percent year on year.
Huang Yixuan

Shanghai demonstrated strong financial resilience and further improvement in its international financial center capacity, with the city's latest Financial Climate Index rising 6.8 percent year on year.

A noteworthy aspect of this prosperity is the internationalization of Shanghai's financial industry, exemplifying a dual-driven and synergistic development pattern based on financial markets and featuring the Chinese yuan.

The 17th edition of the Shanghai Financial Climate Index was unveiled on Tuesday. Compiled collaboratively by the Shanghai Financial Association and the China Economic Information Service, this index serves as a pivotal indicator, offering insight into the city's financial industry, and the broader financial sector.

It comprises an objective indicator system encompassing six primary dimensions: financial markets, financial institutions, financial talents, financial internationalization, financial innovation, and the financial ecological environment.

Survey results from financial practitioners underscore a "good" level of climate evaluation across various dimensions of Shanghai's financial industry in 2022. Notably, most financial practitioners perceived an overall improvement in the city's financial climate compared with the previous year, with significant advancements in financial innovation and the ecological environment.

Crucial factors driving the index's upward trend are the sub-indices of the financial market climate and financial internationalization climate. The financial market climate sub-index in Shanghai reached 11,007.81 points, reflecting a year-on-year surge of 10.9 percent. In 2022, Shanghai's financial market demonstrated robust performance, with a total transaction volume reaching 2.933 quadrillion yuan (US$405 trillion), surpassing the target outlined in the "14th Five-Year Plan for the Construction of the Shanghai International Financial Center."

Tang Jianwei, chief researcher at the Bank of Communications Financial Research Center, highlighted Shanghai's deepened engagement in global financial governance and enhanced comprehensive strength in the national financial market, with the sub-index for financial internationalization climate rising 8.4 percent to 9,782.68 points last year.

Notably, Shanghai's share of cross-border yuan settlement accounting for nearly half of the national total last year.

The sub-index for financial institutions climate, meanwhile, reached 3836.71 points with a 1.2 percent year-on-year growth. Shanghai has emerged as a major hub for foreign financial institutions in China, with the city serving as the preferred entry point for financial institutions looking to establish a presence in China.

As of the end of 2022, Shanghai boasted 1,736 licensed financial institutions, including 539 foreign-funded financial institutions, accounting for nearly one-third of the total. Meanwhile, the number of foreign-funded banks, fund management joint ventures, and foreign-funded insurance companies headquartered in Shanghai all accounted for about a half of the mainland's total.

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