Financial services can transform Yangtze region

Propelling integration

Shanghai, as a rising financial hub with a concentration of financial institutions, corporate headquarters and talent, should make more efforts to maximize the role of finance in pushing ahead integrated development of the region.

First of all, the city should further lift its heft as an onshore financial services center and step up to build itself into an offshore financial hub as well, which will facilitate investment and trade within the region and help it to attract more investments both from home and abroad.

By far, the city has become an onshore international financial services center with the Lujiazui area at the core, while it should further extend its functions in the pricing of onshore renminbi, settlement, securities financing, commodity pricing, and asset management.

Meanwhile, given that reform and opening-up policies have made breakthroughs in the China (Shanghai) Pilot Free Trade Zone, it is feasible to build an offshore financial center with the Lin-gang Special Area, a new section of the free trade zone, at the heart.

The center should fulfill the roles such as overseas investment, the pricing of offshore renminbi, and cross-border trade financing.

Second, stakeholders can work together to maximize the role of Shanghai's STAR Market in spurring innovation within the region, especially when it comes to facilitating the growth of tech startups yet to float their shares.

The STAR Market on the Shanghai Stock Exchange, the pioneer of the country's market-oriented reform of the initial public offering system and designed to become the cradle of China's technology leaders, has seen more than 180 firms raise money from IPOs since it debuted in July 2019.

Governmental platforms could deepen cooperation with private equity funds of funds that invest in tech firms, especially those having the potential of going public on the STAR Market, to provide advisory and other services or invest in those firms.

This will, in tandem with the STAR Market, facilitate the financing of public firms, and help form systematic financial supports for technology firms at different stages of development.

Third, to better serve small businesses and promote industrial upgrading, Shanghai should propel the development of supply chain finance by virtue of being home to many corporate headquarters.

A lot of medium, small and micro businesses spread in the Yangtze River Delta region and are an indispensable part of the region's industrial chain. The large corporations headquartered in the city are usually at the heart of local supply chains and have close connections to the upstream and downstream businesses of smaller sizes.

Therefore, Shanghai can roll out more favorable policies to encourage large corporations to provide more financial services to smaller market entities, such as offering credit loans as well as providing financing based on accounts receivable, prepaid expense, and inventories.