Trade tensions loom as 'Wall Street of China' hosts global financial forum

The annual Lujiazui Forum in Shanghai has a been high-profile event on China's finance-industry calendar since 2008, providing an important platform for global dialogue and sometimes the unveiling venue of major new policies.

This year's two-day event, which opens on Wednesday, promises "some important financial policies," according to government authorities.

The forum draws policymakers, business leaders and financial experts from China and around the world, including frequent attendance by the heads of the People's Bank of China, the National Financial Regulatory Administration and the China Securities Regulatory Commission.

At the meeting in 2019, China unveiled Shanghai's Star stock exchange for science and technology companies. Last year, the International Monetary Fund announced plans to establish a Shanghai base for its activities in the Asia-Pacific region.

Current US-China trade tensions, initiated by US global tariffs, are expected to be a major undercurrent of discussion in both formal sessions and informal talks on the sidelines.

Shanghai, a major financial and global trade hub in China, is a fitting locale for the forum to meet. It has taken a lead on formulating policies to help reduce risk for companies stung by US punitive tariffs.

The city has set up a separate department to provide importers and exports advice and financial relief, including special credit quotas, extended repayments and simplified approval processes for those in trouble. In one month, nearly 20,000 trading companies have received help from the department, which has disbursed loans of more than 240 billion yuan (US$33.4 billion), according to the Shanghai Financial Regulatory Bureau.

The city has also encouraged insurance companies to develop targeted products, such as transport insurance, short-term export credit insurance and export liability insurance.

One recurrent question at these forums is how Shanghai should continue to improve its services as a global financial hub.

The city remains a magnet for foreign-invested financial companies. All five foreign-controlled wealth management companies in China are based in Shanghai, and 11 of 17 foreign wholly-owned insurance companies have their headquarters in the city. Of the 1,728 licensed financial institutions in Shanghai, one-third involve foreign investment.

The attraction of the city rests on its history of providing an environment conducive for the financial industry to flourish.

In the past year, Shanghai has advanced development of the reinsurance market and opened six international products – including crude oil, low-sulfur fuel oil and international copper – to overseas investors.

Magnolia bonds issued by the Shanghai Clearing House in 2023 have proven a major step forward in internationalizing China's fixed-income sector, with sales of the bonds exceeding the 100 billion yuan last year and the Luxembourg Stock Exchange the first in Europe to list them.

Equally important, successful cross-border programs now link Shanghai and Hong Kong stock markets, and China and European markets, facilitating easier movement of capital investment. In forex, the Cross-Border Interbank Payment System now spans the globe, with more than 4,900 corporate banks. In 2024, Shanghai's cross-border yuan settlement volume accounted for 47 percent of China's total.

"Financial deregulation is a critical component of China's overall opening-up strategy," said Zhou Xiaoquan, executive deputy director of Shanghai's financial affairs office.

Lujiazui, the financial heart of the Pudong New Area, is often compared to New York's Wall Street and hosts China's largest number of financial markets. Its glittering array of skyscrapers, rising from what was just farmland a few decades ago, bears witness to China's rapid development in finance.

The theme of this year's forum is "Financial Opening-up, Cooperation and High-Quality Development in a Changing Global Economy."

It will encompass eight themed seminars tackling topics such as coordination of global monetary policies, sustained development of capital markets, AI-empowered financial tools and green finance.