Shanghai maintains global finance hub push

Multinational players encouraged to innovate in expanding sector

Global financial service providers are positive about development in Shanghai with the city government setting higher goals in building itself into an international financial center during the 14th Five-Year Plan (2021-25).

Shanghai released its financial development plan for the 14th Five-Year Plan period, which envisions the city evolving into a strategic link between the domestic and international markets, in August.

The plan details specific tasks like the development of a global asset management center, financial technology center, financial talents and finance environment, among others.

The city will highlight the internationalization of its financial market and further widen scope for the issuance of the panda bond, the yuan-denominated bond from a non-Chinese issuer.

In the next five years, domestic issuers will be supported to issue more yuan bonds, the Chinese corporate bonds denominated in foreign currencies. Financial institutions will be encouraged to provide services related to offshore economic and trade activities.

Qualified foreign institutions will be encouraged to set up wholly owned or jointly held securities firms, mutual funds, futures companies, life insurance companies, asset management subsidiaries of commercial banks, pension fund management companies, and credit rating agencies in Shanghai.

A growing number of foreign financial institutions, such as securities firms and insurance companies are setting up wholly owned subsidiaries or joint-ventures in Shanghai, thanks to the city's determination and planning objectives that have become stabilizers for financial institutions.

So far, the number of licensed financial institutions in Shanghai has surpassed 1,600, with one third foreign-funded.

While the uncertainty surrounding international trade amid the COVID-19 pandemic continues, Shanghai has kept its third position in the Global Financial Centers Index for two years in a row. The index was jointly released by the Shenzhen-based China Development Institute and United Kingdom-based think tank Z/Yen Partners in March.

According to the plan, the total trading volume in the city's financial markets is expected to be worth about 2.8 quadrillion yuan ($432.9 trillion) by 2025, while the scale of direct financing is targeted to be about 26 trillion yuan. The city will also be home to around 50 leading fintech enterprises.

AXA, the Paris-headquartered multinational insurance company, said it will become more involved in the development of Shanghai as an international financial center.

"As the financial center of China, Shanghai's reform and development in the finance sector plays a key role," said Zhu Yamin, CEO of AXA Tianping Property & Casualty Insurance Company, invested in by AXA.

Shanghai's goal of building itself as an international finance center will further promote the openness of the industry with supporting facilities and policies improved accordingly, Zhu said.

AXA entered China in 1999 with a joint venture with Chinese mining firm China Minmetals Corp called AXA-Minmetals Assurance. Since then, AXA has expanded its businesses in the country with a slew of investments.

Choosing Shanghai to be its China headquarters from the outset, AXA's business in the country covers property and casualty, life and savings, innovation, reinsurance and investment management.

Zhu said the standardized development of the finance industry will help to create a level playing field for all companies, who will be able to better utilize their advantages.

And thus it will provide consumers in Shanghai and even across the country with better options in financial consumption, she noted.

The company said it will continue to invest in the sector, and hopes to "grow together with Shanghai and China's financial industry" as one of the most diversified foreign insurance players in the China market.

AXA is among the foreign financial institutions greatly benefiting from the opening-up in the finance sector.

In 2019, the company got the nod from the China Banking and Insurance Regulatory Commission to buy the remaining 50 percent stake of its joint venture in AXA Tianping. The first of its kind transaction in the Chinese insurance market by the company, made it become one of the largest foreign invested property and casualty insurance companies in China.

China has become the world's second-largest insurance market, second only to the United States. The fast pace of growth in the market is expected to create more business potential.

AXA said it will target the growth potential of health markets in China as consumers become more aware of health issues and improved quality of life.

Meanwhile, AXA is also pushing digitalization, which is aligned with Shanghai's goal of developing finance digitalization.

By integrating digitalization into products, customers are expected to enjoy more intimate and convenient services, it said.

With the rich experience in the sector and solid foundation to grow, AXA Tianping will continue to deliver its expertise and support the finance industry's further development across China, Zhu said.

AXA Tianping now operates more than 200 branches over 20 provinces and cities across China.