Shanghai shall become B&R investment, financing hub, international entrepreneurs

Shanghai should take full advantage of the financing function of the Shanghai Stock Exchange (SSE) in stock and bond markets to become an important financing center along the Belt and Road, several international entrepreneurs suggested at the 29th Meeting of the International Business Leaders' Advisory Council for the Mayor of Shanghai.

According to the China Business News, in 2016, Shanghai worked out a new overall urban development plan, with the goal of transforming Shanghai into an outstanding global city characterized by commitments to fostering innovation, the humanities and the environment by 2040.

Shanghai will take an active role in Belt and Road construction and gear its development towards the needs of the cities and markets along the Belt and Road. In addition, Shanghai will strengthen economic and trade cooperation, financial services, infrastructural construction, people-to-people exchanges and sister city cooperation. These initiatives would help to make Shanghai a city with outstanding services, a favorable environment and a larger capacity for supporting Belt and Road construction according to Ying Yong, Mayor of Shanghai.

The Belt and Road construction involves policy coordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bond. Financial integration, in particular, is important for the success of the Belt and Road construction. Due to the large number of developing countries along the Belt and Road, however, infrastructure and other major projects are facing problems including insufficient construction capacity and shortages of capital. Many of these countries also have significant financing needs.

For these countries, Shanghai is well positioned to help. As one of the cities with the most developed financial markets in the world, Shanghai registered a financial trade volume of RMB 1,300 trillion in 2016.

Shanghai has many strengths and advantages that would allow the city to provide financing to projects and companies along the Belt and Road. Shanghai would also be able to enhance its role as a world leading financial center, according to Bob Moritz, chairman of PricewaterhouseCoopers.

Vincent H. S. Lo, chairman of Shui On Group, explained that due to the large amount of capital needed by Belt and Road projects, no country can afford it alone, thus Shanghai should be an investment and financing hub that integrates resources.

The Organization for Economic Co-operation and Development (OECD) predicted that a total of 71 trillion U.S. dollars is needed for global infrastructural investment. Half of these needs are from the countries along the Belt and Road where 2.7 trillion U.S. dollars are needed per year. The Belt and Road project investment needs to also be driven by business modes that are sustainable, said Lo.

The Belt and Road Initiative has created a long-term development opportunity for clean energy technologies and high-efficiency infrastructure. Shanghai can serve as a Belt and Road financing hub linking the public sector and private sector to multinational and multilateral development banks, while also establishing sustainable financing of debts, said Mark Tucker, director of HSBC Holding Plc.

To promote the Belt and Road connectivity, Lo suggested establishing a Belt and Road sector on SSE, to attract enterprises along the Belt and Road as early as possible. This strategy would gradually turn Shanghai into the preferred trading market for the countries along the Belt and Road.