On June 26, AmCham Shanghai hosted a launch event at the Portman Ritz-Carlton for a new report issued by the Chamber and the Brookings Institution that assesses Shanghai’s plan to become an international financial center (IFC) by 2020. The report, Achieving 2020: An assessment of Shanghai’s plan to become an international financial center by 2020, finds Shanghai is on track to become an IFC, an objective declared by China’s State Council in March of 2009, but faces challenges to achieving this goal by 2020.
“Achieving 2020” is a culmination of research, presentations and round-table discussions with the AmCham Shanghai Financial Services Committee and other Chamber members in the tax and legal professions, plus key findings from a white paper written by Douglas Elliott, a Fellow in Economic Studies at the Brookings Institution in Washington, D.C., on how Shanghai would establish itself as one of the world’s preeminent international financial centers by 2020.
Brenda Foster, president of AmCham Shanghai, said at today’s launch, “AmCham Shanghai strongly supports Shanghai’s 2020 plan to establish itself as an IFC. We hope that this report offers Shanghai officials useful input and that we can work together moving forward to achieve this ambitious and worthwhile goal.”
Achieving 2020 defines a financial center as a location where a substantial amount of financial business is conducted. An international financial center is a location where the scale of activity and the business that is done there are primarily global in nature. Today, there are two broadly recognized IFCs: London and New York.
The report identified four conditions as requirements for Shanghai to become an IFC:
- A well defined, highly intermediated market and the ability to create financial products and services
- Depth in both the number and competitiveness of market participants, both in terms of financial institutions and investors
- A deep reservoir of knowledgeable and talented financial service professionals
- Appropriate financial infrastructure and regulatory parameters that foster and facilitate the previous three requirements. These include legal, tax, regulatory, settlement and others.
Achieving 2020 did not concentrate on the obvious requirements of a convertible currency and other issues that have been well covered in the past. Instead, the report focused on the first priority listed above: having a well defined, highly intermediated financial market, the ability to create and deliver products and services inside this market and on the market mechanics within the debt, equity and derivatives markets.
“It would be a mistake to conclude that the glass here is ‘half empty’,” said Ben Kinnas, AmCham Shanghai’s Financial Services Committee Chair and Senior Vice President & General Manager, Wells Fargo Bank, Shanghai Branch. “But there are several challenges consistent in all three markets and number one is regulatory transparency and a challenging approval process for financial service providers. This is a recurring theme and one that if addressed, will go a long way in helping Shanghai achieve its objectives.”
(Left to right) Eric Zheng, Ben Kinnas, Tim Huang, Walker J. Wallace, Dr. Wing Wu and Julien Martin
Tim Huang, Chief Operating Officer for Bank of America Merrill Lynch China, said, “I think Shanghai has the resources, has the economy behind it to become a financial center, it being regional or international.” Huang continued, “I think the regulators and the government do need to look at opening up more on the market side, and there is plenty for both domestic and foreign players to gain in this market and everybody wins if you really open it up.”
In the report, Brookings’ Doug Elliott compared Shanghai to other cities that have tried and failed to become IFCs or are in the process of attempting to develop one. According to Elliott, advantages held by Shanghai include access to a huge and growing Chinese market, strong support of national and local governments, existence of futures and options markets, progress developing its “hard” infrastructure and the vibrancy of Shanghai itself. Top concerns: opaque political decision processes and political favoritism.
Stated Elliott, “Shanghai has an excellent chance of becoming a true Global Financial Center, if China remains fully committed to this very difficult task for years to come. However, it must avoid the mistakes that Tokyo, Frankfurt, Paris, and others have made which prevented their achieving this same goal. Tokyo, for example, focused too much on preserving the advantages of its existing financial elites, allowed too much political interference in market mechanisms, and failed to accommodate the legal and language needs of the rest of the world.”
The launch event featured a presentation by Kinnas summarizing the report’s highlights. A panel discussion followed that included Kinnas in addition to Tim Huang, Chief Operating Officer for Bank of America Merrill Lynch China, Julien Martin, Deputy Head of Fixed Income China, and Managing Director, BNP Paribas, Dr. Wing Wu, CFA, and Walker J. Wallace, Partner, O’Melveny & Myers. Eric Zheng, General Manager of Chartis Insurance Company China Shanghai Branch, served as moderator.
At the launch event, Kinnas echoed Elliot’s point. “I don’t think we’re going to see a carbon copy of London or New York. We’re going to see Shanghai, and that’s what we want to see. But we want certainly a Shanghai that works for everybody,” he said.
In regards to the role of foreign financial institutions in supporting Shanghai’s objectives, Kinnas focused on what they bring to the market. “We offer know-how, which is what we’ve offered in the past. We offer capital, which is what we’ve offered in the past. With capital, we offer liquidity in the market, which is what we’ve offered in the past. And we offer customers to come into this market and to trade and do business with Chinese companies.”
The report also concluded that several recommendations may be suitable for pilot programs limited at first to Shanghai and the Yangtze River Delta, a process which China has followed in the past.
Click here to download a copy of Achieving 2020: An assessment of Shanghai’s plan to become an international financial center by 2020.
The American Chamber of Commerce in Shanghai is pleased to invite you to the official launch of the joint AmCham Shanghai and Brookings Institution report, “Achieving 2020: An assessment of Shanghai’s plan to become an international financial center by 2020.”
The report is a culmination of research, presentations and round-table discussions with the AmCham Shanghai Financial Services Committee, AmCham Shanghai constituents in the tax and legal professions, plus key findings from a white paper written by Douglas Elliott, a Fellow in Economic Studies at the Brookings Institution in Washington, D.C., on how Shanghai would establish itself as one of the world’s preeminent international financial centers by 2020.
Join the AmCham Shanghai Financial Services Committee and an Expert Panel for lunch on Tuesday, June 26 from 11:30–13:30 at the Portman Ritz-Carlton to hear key findings of the report, an assessment of Shanghai’s progress towards becoming an IFC by 2020 and a discussion on the challenges in developing the city’s equity, debt and derivatives markets.
11:45 Buffet lunch
12:15 Presentation followed by a panel discussion Q&A
13:30 Event Concludes
About the Speaker:
Ben Kinnas is Senior Vice President & General Manager, Wells Fargo Bank, National Association, Shanghai Branch, and Chair of the AmCham Shanghai Financial Services Committee. Kinnas is concurrently regional manager for trade finance in the Asia-Pacific region. Through various mergers, Kinnas has been with his current employer since 1986 (originally the legacy Philadelphia National Bank and now a Wells Fargo company) and in banking since 1982. Kinnas led the bank-working group that authored the Commercial Banking portion of the 2008 AmCham white paper and undertook this task again in 2009. Earlier in his career, he was active in advocacy efforts to deregulate and liberalize the Japanese banking sector.
About the Panelists:
Tim Huang is Chief Operating Officer for Bank of America Merrill Lynch China, where he is responsible for business strategy, planning and reporting, operational oversight and business development initiatives. He also provides senior coverage for key clients, regulators and government officials. Huang joined Bank of America Merrill Lynch in 2003, and he had several executive positions with the bank including Senior Vice President for global corporate and investment banking and executive for corporate strategy and development. Before joining the bank, Huang served in multiple management roles at Honeywell including Director of International Business Development.
Walker J. Wallace is a partner in O’Melveny & Myers’ China practice and has worked from the firm’s Shanghai office for close to 15 years. Wallace has extensive experience in international transactions and has helped clients in a wide range of projects across Asia, from multi-nationals seeking to invest in China, to private equity funds pursuing investment strategies in Southeast Asia. In China, Wallace has helped clients negotiate the complexities of investing and structuring business operations in numerous industries, including media and entertainment, consumer products, healthcare, real estate, software, retail and education.
Julien Martin, Deputy Head of Fixed Income China, and Managing Director, BNP Paribas, is based in Shanghai. He has 14 years experience with BNPP in Fixed Income. After graduating from ESSEC MBA (AACSB & EQUIS accredited, degree in Finance and Management), Martin joined BNPP London in 1999 running strategic development and working in the emerging market business. Prior to moving to Shanghai, he was based in BNPP Hong Kong since 2006 as regional front office Chief Operating Officer, Fixed Income Asia-Pacific. He focused on the development of Fixed Income activity in China, set up the strategy, client acquisition plan and bank coordination on Lending/derivatives.
Dr. Wing Wu, CFA, has more than 17 years of Debt Capital Markets experience spanning across the Asia-Pacific region, with the last several years focusing on China onshore and offshore RMB bond markets. Wing came to China in 2000 heading up the first Sino-foreign JV credit rating agency, China Chengxin International Rating Co. Since then, Wing has been very much involved in the development of the China bond markets. From 2007-2011, Wing was the Head of Debt Capital Markets at UBS China Securities Co and HSBC China. Currently, Wing runs a Venture Capital Management Consulting Company based In Beijing.
About the Moderator:
Eric Zheng is General Manager of Chartis Insurance Company China Shanghai Branch. Chartis China is a subsidiary of Chartis International under American International Group (AIG) and the largest foreign property and casualty insurance company in China. Prior to his current position, Zheng was Director of Strategic Planning at Chartis China, responsible for planning and executing business expansion strategies in China. Prior to AIG, Zheng was Principal Commercial Officer at the U.S. Consulate General in Guangzhou. As the top official representing the U.S. Commerce Department in South China, he was responsible for marketing U.S. products and services to and helping American companies do business in South China. Before his diplomatic position in China, Zheng spent eight years as a management consultant with PricewaterhouseCoopers based in Washington, D.C. Zheng is a former Honorary Governor of AmCham South China and board member of the U.S.-China Capital Cities Friendship Council in Washington, D.C.
RSVP: All AmCham Shanghai events require confirmation of attendance (RSVP). If you attend an event without prior notification you will be charged a RMB 50 "walk in" fee.
RSVP Cancellation: If you need to cancel your RSVP please notify AmCham Shanghai's Events Department at (86 21) 6279-7119 no less than 24 hours in advance.