Edited by Yung Chul Park, Takatoshi Ito and Yunjong Wang
Chapter 14: The Re-emergence of Shanghai as a Financial Center in China’s Financial System
14. The re-emergence of Shanghai as a ﬁnancial center in China’s ﬁnancial system Hongzhong Liu and Changjiang Yang 1. INTRODUCTION Since economic reform took place in 1978, China has gradually turned from a closed and planned economy to a fast-growing market-oriented open economy. The growing linkage in terms of trade and FDI between China and rest of the world makes China play an increasingly important role in the global economy. Historically, Shanghai had been an international ﬁnancial center in the Far East, with Tokyo and Hong Kong behind it. As the ﬁrst city in China where a stock exchange emerged, stock trading can be traced back to the 1860s. In 1891, the Sharebrokers Association was established as an embryonic form of Mainland China’s stock exchange. By the 1930s, more than 200 foreign banks had branches operating in Shanghai. However, as China adopted the central planned economy after 1949, Shanghai remained only as the largest industrial city on the mainland but the ﬁnancial markets in Shanghai were abolished. As the economic reform deepened, ﬁnancial market in Shanghai re-emerged rapidly. In 1990, which was symbolic for Shanghai in its recovery as a domestic ﬁnancial center, the Shanghai Stock Exchange was set up. Up to now, the ﬁnancial markets in Shanghai include the Shanghai Stock Exchange, China Foreign Exchange Trade System, National Interbank market, Shanghai Futures Exchange and Shanghai Gold Exchange. Therefore Shanghai is often quoted as the domestic ﬁnancial center, which needs to be justiﬁed from the perspective of the ﬁnancial...
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