Building Shanghai into an international financial center is a key national strategy. In 2023, the central leadership released a series of significant policies to accelerate Shanghai's "Five Centers" initiative. These policies promote the comprehensive reform pilot program in the Pudong New Area. They also align with high-standard international economic and trade rules, promoting the high-level institutional opening-up of the China (Shanghai) Pilot Free Trade Zone. This has provided strong impetus for Shanghai's international financial center initiative.

So far, Shanghai has largely established itself as an international financial hub commensurate with China's economic strength and the international status of the RMB, and is now entering a phase of overall capacity enhancement.

Shanghai is home to one of the most comprehensive financial market systems in the world. The city has established a complete set of financial factor markets and integrated key infrastructure such as registration, custody, and clearing of financial products. This foundation provides a solid guarantee for the issuance, pricing, trading, payment and settlement, and risk management of RMB-denominated financial assets. Shanghai is also among the world's leading financial markets in terms of size. In 2023, the total turnover of Shanghai's financial markets reached 3,373.63 trillion yuan, an increase of 15 percent year-on-year. The amount of direct financing reached 17.82 trillion yuan, accounting for about 90 percent of the country's total.

The diverse range of Chinese and foreign financial institutions in Shanghai enables sustainable, high-quality development in the financial sector. In addition to banks, securities firms, insurance companies, and fund management companies, Shanghai has become the preferred destination for international, functional, and new-type financial institutions and headquarters. By the end of 2023, Shanghai was home to 1,771 licensed financial institutions, with 548 being foreign-invested institutions. Shanghai's financial business continues to expand, with the sector's added value reaching 864.69 billion yuan in 2023, representing 18.3 percent of the city's GDP and 8.6 percent of China's total financial sector value added.

Standing at the forefront of China's high-standard financial opening-up, Shanghai is embracing the international financial community with an increasingly open approach. The city has become a major hub for foreign-invested financial institutions in China. The locally incorporated foreign banks in Shanghai account for half of the total in the Chinese mainland. The number of joint venture fund management companies and foreign insurance companies in Shanghai both account for about half of their respective totals in the Chinese mainland. The scope of financial openness has continued to expand, with accelerated two-way opening-up in interbank bond, foreign exchange, and money markets. Major institutional arrangements and financial products, such as Shanghai-Hong Kong Stock Connect and Shanghai-London Stock Connect, have been launched and opened to international investors.

As it continues to blaze new trails and break fresh ground, Shanghai has become the country's pioneer for financial reform and innovation. The city has taken the lead in exploring financial reforms in the pilot FTZ and strengthened its position as a hub for the cross-border use of RMB. Fintech companies continue to cluster in Shanghai, driving the development of the city as a fintech center. Shanghai has also actively developed green finance and further consolidated its position as an international green finance hub.

The business environment for the financial sector of Shanghai has been continuously optimized and provides all-round support for financial institutions. Efforts to enhance the rule of law in the financial sector have been deepened, while credit and consumer protection systems have been continuously improved. Foreigners are enjoying greater payment convenience, and the environment for talent development is improving steadily, with nearly 500,000 financial professionals in the city.

Shanghai's development as an international financial center will focus on creating a more open, efficient, stable, and dynamic financial system. This includes enhancing its global resource allocation capabilities and striving for new breakthroughs.

Source: Office for Advancing International Financial Center Development of the Shanghai Municipal People's Government