Shanghai rises on global financial stage

City attracts major names from Wall Street

Shanghai has strengthened its position as one of the world's leading financial centers and is attracting some of Wall Street's biggest names despite trade tensions and the coronavirus pandemic, according to experts.

At the end of September, the city overtook Tokyo as the third-ranked financial center, after New York and London, in the latest Global Financial Centres Index.

The index is published jointly by the Z/Yen Group, a leading commercial think tank based in London, and the China Development Institute, a think tank in Shenzhen, Guangdong province.

China's increasing financial liberalization has also seen major outlays in Shanghai by United States investment banks JP Morgan and Morgan Stanley, along with other key institutions such as Blackrock, the global investment company.

At the end of last year, trading volumes in Shanghai's financial markets stood at 1,934 trillion yuan ($288 trillion), nearly eight times the level a decade ago, according to the CEIBS Lujiazui Institute of International Finance, part of the China Europe International Business School, which is based in Shanghai.

The number of licensed financial operations in the city during this period rose from 986 to 1,646.

Mike Wardle, head of indices at Z/Yen Group, said China's strong economy is providing a major boost for Shanghai.

"Shanghai is seen as a place where the real economy supports a thriving financial-sector market," he said.

In the Global Financial Centres Index, Shanghai had a rating of 748, behind first-placed New York's 770 and London's 766 in second place, and just ahead of Tokyo on 747.

The ratings take into account a number of broad criteria, such as the overall business environment, human capital available, infrastructure quality, financial-sector development, and reputation.

"Shanghai has increased its relative ranking in the instrumental factors－the quantitative measures－that underlie the index. It has also had consistently high ratings from financial professionals around the world, who assess the competitiveness of financial centers," Wardle added.

Zhu Ning, a leading expert on the Chinese financial system and professor of finance at the Shanghai Advanced Institute of Finance, said the city is re-establishing its position as Asia's premier financial center, which it lost during the War of Resistance Against Japanese Aggression (1931-45).

"It is being driven first and foremost by the rise of China's economy and the wealth creation that is derived from that. The Shanghai government has also played a role in its endeavor to grow the city as a financial center. You cannot ignore the importance also of China's ongoing reform of the financial services sector, which has attracted capital and talent from all over the world," he said.

Douglas McWilliams, deputy chairman and founder of the Centre for Economics and Business Research, a consultancy based in London, said it had been obvious for a while that Shanghai would surpass Tokyo.

"China overtook Japan as the world's second-largest economy in 2010. It was only a matter of time before one of the Chinese financial centers overtook Tokyo," he said.