Program

14:30-15:00   Registration

15:00-15:10   Opening Remarks

XIE Ruiwu, Municipal party committee member and Executive Vice Mayor, CPC Chengdu

15:10-15:30   GFCI 22 Launch

Michael MAINELLI, Director, Z/Yen Group

15:30-15:50   GFCI 22 Greater China Financial Centres Review

YU Lingqu, Deputy Director, Department of Finance and Modern Industry, CDI

15:50-16:10   Q&A

Michael MAINELLI, Director, Z/Yen Group

LIANG Qizhou, Secretary of the Leading Party Group and General Director, Chengdu Municipal Bureau Of Financial Work

YU Lingqu, Deputy Director, Department of Finance and Modern Industry, CDI

16:10          Conclusion

Highlights

London and New York remain in first and second places. Interestingly, despite the ongoing Brexit negotiations, London only fell two points, the smallest decline in the top ten centres. Hong Kong has moved just ahead of Singapore into third – only two points ahead on a scale of 1,000. Tokyo remains in fifth.

There are seven cities across the Chinese mainland rated in the GFCI 22, namely Shanghai, Beijing, Shenzhen, Guangzhou, Qingdao, Dalian and the newcomer Chengdu. Among them, Shanghai got 711 points and ranks 6th, rising 7 places in the rankings. Beijing rose 6 places to the 10th position. Shenzhen got 689 points and ranks 20th, rising 2 places. Shanghai, Beijing ,and Shenzhen are in the top 20 financial centres. Guangzhou ranks 32nd and Qingdao ranks 47th. Chengdu, first enlisted in the GFCI rankings from the associate centres list, ranks 86th and got 604 points. Dalian fell to 92nd.

Western European financial centres are still volatile. Frankfurt, Dublin, Paris and Amsterdam all rose, but Zurich, Geneva, and Luxembourg fell in the ratings. Overall assessments for the European centres continued to fluctuate as people speculate about which centres might benefit from London leaving the EU.

The leading financial centres in the Asia/Pacific region fell in the GFCI ratings. All of the top ten centres in the region fell in the ratings with Singapore, Tokyo, and Osaka all showing marked declines.

All centres in North America fell in the GFCI ratings. New York fell. San Francisco, Boston, Chicago, and Washington also saw large falls. The decline of Canadian centres was less severe than the falls of the USA centres.

All of the Eastern European centres rose in the ratings. Cyprus, Athens, St Petersburg, and Moscow reversed some of their recent declines.

Financial centres in the Middle East and Africa showed mixed results in GFCI 22. Dubai and Casablanca fell slightly, but other centres in the region did well.

Latin American and Caribbean centres did well. The Caribbean centres of the British Virgin Islands and the Bahamas saw strong rises. Sao Paulo and Rio de Janeiro also did well.

European ‘island’ centres did well. The British Crown Dependencies of Jersey, Guernsey, and the Isle of Man all per-formed strongly and there were also strong rises for Malta, Reykjavik, and Gibraltar.

The GFCI provides profiles, rating and rankings for 108 financial centres, drawing on two separate sources of data – 102 instrumental factors (five broad ‘areas’ of competitiveness, namely business environment, financial sector development, infrastructure, human capital and reputational factors) measured externally and 23,812 financial centre assessments by 2,058 international financial professionals in an ongoing online questionnaire. It was first published in 2007 and then updated and republished each September and March.

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Program

Program

14:30-14:35    Opening Remarks

GUO Wanda, Executive Vice President, CDI

14:35-15:35    Dialogue: Rethinking RMB Internationalization: Why is Japan so Prudent about Yen's Internationalization?

Yosuke TSUYUGUCHI, Professor, College of Economics, Nihon University

15:35-16:25    Q&A  

16:25-16:30    Closing Remarks

Highlights

Highlights

RMB can learn the experience of the internationalization of the Japanese Yen, which is the third largest currency globally. Closely related to domestic and international economic landscape, each stage of Yen’s internationalization shows distinct features. Since the setback in Yen’s internationalization process in the 1980s and 1990s, efforts have been made to improve the domestic financial market, enhance cooperation with other regions in Asia and increase Yen use in the region, leading to the next breakthrough in the international process of the currency.

From the transaction volume of global currencies and the proportion in global foreign exchange reserve, the Yen is a third-ranking international currency. In terms of the transaction volume in 2016, the U.S. dollar, the Euro and the Japanese Yen are still the top three international currencies, with a market share of 87.6%, 31.3% and 21.6% respectively. The RMB ranks 8th with a market share of 4.0%. The statistics issued by the IMF in March, 2017 shows that the top three international currencies are still the U.S. dollars (5709 billion dollars, accounting for 64.5%), the Euro (1706 billion dollars, accounting for 19.3%) and the Yen (403 billion dollars, accounting for 4.6%) . The RMB ranks 7th with 88 billion U.S. dollars, accounting for 1.0 %. In the above two rankings, the status of the Japanese Yen is increasingly established with significant advantages, ranking the 3rd in a considerably long period, but with rather low use rate in international trade.

Process of the Yen’s internationalization

The rapid development of Japan’s economy in the 1970s and the opening of the financial market provided an opportunity for the Japanese Yen to go international. In 1984, Japan’s Ministry of Finance issued an announcement titled “The Current Status and Prospect of Financial Liberalization and Japanese Yen’s Internationalization”, achieving the full liberalization of the capital account and officially starting the process of Yen’s internationalization. Despite a series of measures to promote Yen’s internationalization, the scale of use in international trade in goods and financial transactions still fell far short of the expectations of the Japanese government.

The setbacks in interest rate liberalization and economic bubbles have affected the progress of Yen’s internationalization. In retrospect, Japan revised the law on foreign exchange management in 1980, and abolished the limit on trade between the Yen and foreign exchange in 1984, thus introducing the freely floating exchange rate regime and liberalizing the transaction of capital account items, but the reform on interest rate failed. Meanwhile, “window guidance” still applied by Japan’s central bank has had a negative impact on the effectiveness of Japan’s monetary policies, resulting in a huge influx of capital into Japan, which became an important trigger for the country’s economic bubbles. The occurrence of the bubble economy and its final burst severely disrupted the financial market of Japan and also hindered the internationalization of the Yen.

The low interest rate and low foreign exchange rate policy has weakened the Yen’s appeal for investors, putting its internationalization under huge pressure. Following the burst of the bubbles, Japan’s central bank switched from the previous monetary tightening to a slash of interest rate to recover the economy and boost domestic demand. Between 1991 and 1995, the central bank downwardly adjusted the benchmark discount rate for a total of 9 times, and the interest rate of the Yen has been at relative lows throughout the “lost two decades”. Meanwhile, with the turbulence in financial market in the wake of the Asian financial crisis and the substantial devaluation of the Yen, the value of the Japanese Yen against the U.S. dollar was in a long-time doldrums. Against these dual backdrops, foreigners were lukewarm about investing in Yen. The internationalization of Yen slowed down again due to insufficient demand from the external market.

Experience from the Yen’s internationalization

The experience of Yen’s internationalization shows that a currency’s internationalization process and domestic financial system are complementary to each other. In particular, the integrity of domestic financial system and whether the market is liberalized enough to meet the needs of internationalization will have huge impact on the internationalization process. Therefore, the internationalization of the RMB shall be steadily promoted while firmly situated in the context of Chinese financial market realities.

First, it is essential to properly measure financial liberalization reform. The setbacks experienced by the Japanese Yen in internationalization shows that the optimal time sequence is to first liberalize interest rate and foreign exchange rate, and adjust domestic monetary policies, before opening up the capital market. In promoting the internationalization of the RMB, it would be highly risky to speed up the opening and liberalization of the capital account without supporting reforms. Before achieving full development of China’s financial market, it might be impossible for offshore operations to avoid risks and shocks, which will threaten the stability of the domestic financial market. The precondition for an open and liberal capital account is therefore free exchange rate and interest rate with timely adjustments of monetary policies.

Secondly, the opening of the financial market shall be dynamic while maintaining stability. The marketization of interest rate in Japan is a slow and gradual process, during which period Japan’s financial market has maintained overall stability. From this sense, the “window guidance” policy by the Japanese government is not without merits. However, being overly focused on the stability of financial market at the expense of the reform would increase the vulnerability of Japan’s financial system, which became all the more evident with the emergence of non-performing loans following the burst of bubbles. Therefore, China must approach financial stability with a holistic view, promoting financial reform at a measured pace while adjusting monetary policies to create favorable conditions for the internationalization of the RMB.

Regional economic cooperation to bolster the internationalization of a currency

Since the 2008 financial crisis, Japan gradually stepped up its economic and financial cooperation with other Asian countries in a bid to facilitate the internationalization of the Yen by promoting its use regionally. Such experience is also of reference value for China in promoting RMB internationalization.

The integration into regional economic and financial cooperation is conducive to enhancing the competitiveness of the local currency. It has become a consensus between China and Japan to reduce dependence on the U.S. dollar and the use of it since the outbreak of the financial crisis in 2008, with the cooperation on currency becoming a new area where financial interests converge. In June 2012, direct cross-border trade between the Japanese Yen and the RMB was officially made possible, simultaneously starting the direct trade between the Yen and the RMB in Tokyo and Shanghai. The report on Japan’s foreign exchange issued by Japanese Ministry of Finance mentioned Japan’s willingness to enable direct trade with other Asian countries, as well as a foreign currency settlement system covering the RMB. This came as a new opportunity for China and Japan to cooperate on the internationalization of their respective currencies. It is of great significance to promote currency cooperation between the two countries and across Asia.

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Program

Shenzhen Annual Meeting 2017

14:00-14:30     Registration

14:30-14:45     Opening Remarks

Fan Gang, President, CDI

Xu Yongfa, Chairman, Shenzhen Soft Science Development Foundation

Moderator: Guo Wanda, Executive Vice President, CDI

14:45-15:00     CDI Report on New Economy and Old System

Zheng Yujie, Director, Information and Communications Department, CDI

15:00-15:45   Session One: Inclusive Institutions

Moderator: Guo Wanda, Executive Vice President, CDI

Panelists:

Zhu Yanmei, Executive Vice President, BGI

Wang Zhile, Senior Researcher, Chinese Academy of International Trade and Economic Cooperation (MOFCOM)

Fan Jianping, President, Shenzhen Institutes of Advanced Technology, Chinese Academy of Sciences

15:45-16:00     Q&A

16:00-16:20     Coffee Break

16:20-17:05     Session Two: Innovative Development

Moderator: Tan Gang, Vice President, Shenzhen Municipal Party School

Panelists:

Geng Wenqiang, General Manager, BVOC

Liang Chunxiao, Senior Advisor, AliResearch

Fan Mingtai, Researcher, Institute of Quantitative& Technical Economics, Chinese Academy of Social Sciences

Wang Yanmei, Director, Shenzhen Nanshan Science and Technology Office

17:05-17:20     Q&A

17:20-17:30     Closing Remarks

Guo Wanda, Executive Vice President, CDI

Highlights

Here are excerpts from the Shenzhen Annual Meeting 2017.

“There is still the ongoing conflicts between the new economy and the old system”.

Despite new demands for the installation of phone holders within cars, car manufacturers still find it impossible to fill the gap in this particular niche market due to the arrangements and conflicts of interests in the old system. Moreover, under the new policies for online car-hailing services, local players tend to be rather passive or even resistant to the development of online car-hailing services due to vested interests. Proper management of online car-hailing services is worth deep consideration.

Fan Gang, President, CDI

“China’s economic structure shows a lot of exciting changes. The growth pace of the new economy, new business forms and models is staggering”

While new technologies and industries bring about large-scale investment in fixed assets and the upgrading of consumption, they have also created an extremely flexible labor market for a large number of informal and flexible economies. But faced with problems of fragmentation, regulatory lag, absence of regulation and overlapping functions, the implementation measures of policies and regulations are crucial.

Zheng Yujie, Director, Information and Communications Department, CDI

“To develop the new economy, a shift in management concepts is essential.”

The “three-in-one” system of BGI can boost effective interactions among scientific research, clinical medicine and industries to foster a long-term sustainable development model. BGI’s efforts in this era of life economics can bring gene-related diseases including smallpox and polio under complete control, and in which process find solutions to problems related to the new economy and the old system.

Zhu Yanmei, Deputy Executive President, Beijing Genomics Institute (BGI)

“The shift in mindset to be the precondition for innovation in policies related to foreign capital, namely, to change the thought of state of invest import to export”

This shift in mindset has to be supported by a complete set of new theories to be truly effective. And the discussion about innovation is only meaningful after policies enabling such a shift in mindset have been put in place.

Wang Zhile, Research Fellow, Chinese Academy of International Trade and Economic Cooperation, MOFCOM

“Shenzhen is able to become the first city to ever formulate a law on science and a law on new scientific research institutions.”

The management systems for capital, personnel and whatsoever are lagging behind. This means that scientists are actually trying to innovate with heavy shackles. Therefore, how to innovate management to liberate the productivity of science and technology will be one major challenge for us.

Fan Jianping, President, Shenzhen Institutes of Advanced Technology, Chinese Academy of Sciences

“The development of an innovation-oriented society requires the consensus between government and enterprises”

With what we have understood to be the trends of the new economy in future, the discussion about the new economy and the old system will only be meaningful based on the consensus and sharing among government, research institutions and industries. And with the rise of the new economy, sharing, in replacement of labor division, is growing into a more dominant structure of the whole economy.

Liang Chunxiao, Senior Consultant, Ali Research

“The external support and the innovative awareness of enterprises themselves help Shenzhen become China’s innovation hub.”

First, Shenzhen boasts a unique social atmosphere where innovation is encouraged and failure tolerated, and most importantly the government’s support, guidance and inclusiveness, as well as intellectual support by research institutions for relevant industries. Second, the enterprises have set high standards for their own industries, give importance to core technologies and the building of core technical teams, as well as the sustainability of innovation concepts to lay a solid foundation for continued innovation in future.

Geng Wenqiang, General Manager, EVOC group

“The promotion of the deep integration of innovation resources is the key to the prospects for innovation development.”

The concept of "one foundation and two integrations” really matters. “One foundation” refers to the development of the digital economy, especially the new economy and emerging business forms. "Two integrations” refers to the deep integration between the manufacturing and service industry, and the gradual integration of trade and investment from an open perspective. However, attention must be paid to the balance between innovation and regulation, as well as the inclusiveness of the system.

Fan Mingtai, Research Fellow, Institute of Quantitative & Technical Economics, Chinese Academy of Social Sciences

“A combination of various policy instruments should be adopted by all sectors of society to speed up the integration of innovation resources towards an even more enabling policy environment for industries.”

Qianhai’s status as a place where the “bay area, special zone and free trade zone” overlap has brought considerable resources to the district. In the process of developing new business forms in Shenzhen, the government promotes industrial innovation through incentive policies and proper regulations, which plays a positive role in promoting industrial innovation in Shenzhen.

Wang Yanmei, Head, Shenzhen Nanshan Science and Technology Office

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