Membership Has Its Privileges

By LAN XINZHEN

ZHOU Chunyu, mayor of Ma'anshan City, Anhui Province has finally realized his long-held dream. On March 26 this year his city was officially admitted as a member of the Yangtze River Delta Economic Coordination Council (YRDECC) at the 2010 mayoral joint conference in Jiaxing, Zhejiang Province.

The Yangtze River Delta pivots on Shanghai and covers its neighboring Jiangsu and Zhejiang provinces, China's major hub of finance and private economy. The YRDECC was established in 1996 to promote economic cooperation and coordination of cities in or adjacent to the Yangtze River Delta. Shanghai is the executive chair of the organization, and the municipal government’s Cooperation and Exchange Office takes care of regular operation and coordinates action on major issues. One member city is selected annually for the rotating chairmanship and oversees the yearly mayoral joint conference. Jiaxing of Zhejiang Province is the current chair.

Ma'anshan has long been keen on joining the Yangtze River Delta city group, submitting a formal application to the Shanghai Cooperation and Exchange Office as early as 2004. Over the years, it took an active part in the regional division of labor, a development strategy to integrate the delta resources by strengthening industrial specialization and economic cooperation among its member cities. Along with Ma’anshan, Hefei of Anhui Province, Huai'an and Yancheng of Jiangsu Province, and Jinhua and Quzhou of Zhejiang Province have also recently been admitted as full members, increasing the membership of the YRDECC from 16 to 22 cities.

While Yangtze Delta cities link themselves to Shanghai, the city seeks its place among global financial centers.                                                              CFP

Magnetism of Shanghai

Most of the Yangtze River Delta cities strive to become the next Shanghai. Zhou Chunyun didn't hesitate to voice the same ambition. “Membership for Ma’anshan will make a significant and far-reaching difference on its future.”

As one of the economic, financial, trade and shipping centers of China, Shanghai has long been a global gateway for transnational companies. Among the top 500 enterprises of the world, over 200 have set up their Asia or China regional headquarters in Shanghai. In 2009 the Chinese government put forward a plan for developing Shanghai as a global center of finance and shipping. The Shanghai 2010 Expo is further enhancing the status of the metropolis as a role model for other cities in the delta.

Currently a series of expressways and rail lines are under construction across the delta as the member cities try to reduce their travel time to Shanghai to one or two hours on the premise that offering safe and rapid transport to the regional capital will enhance their own competitiveness as urban centers. Nanjing and Hangzhou, provincial capital of Jiangsu and Zhejiang respectively, have achieved this target.

Ma’anshan isn’t far behind. It is accelerating the construction of a bridge across the Yangtze River and expressways that will connect with Shanghai, Nanjing and Hangzhou.

In fact, Shanghai has been attractive not only to its neighboring delta cities, but also to people and enterprises from all over the world. It was recently listed as No. 2 among the “most attractive cities in the world,” second only to London.

The list, released on February 21 by the Paris Ile de France Capitale Economique and KPMG, was based on a survey of 500 merchants from different countries and investment data from 2009. It showed that in several categories, Shanghai has actually surpassed that of London, such as the number of modern research centers and office buildings it has to offer.

As a growing international metropolis, Shanghai is idolized by smaller cities, particularly in the delta; they look up to Shanghai as the gateway into the world market and long for the chance to come under its wings.

Reemergence of a World Financial Center

Shanghai shows no signs of slowing down its pace. According to the National Bureau of Statistic, it registered a GDP of RMB 1369.8 billion in 2009, with a year on year increase of 9.7 percent. It continues to lead the country’s economy, followed by Beijing and Guangzhou, with a GDP of RMB 1048.8 billion and RMB 821.5 billion respectively.

But being No. 1 in GDP is not Shanghai’s target. Its long-term goal is to become a true global financial center commensurate with China’s economic strength and the RMB’s international clout.

“After a year of assembling the building blocks for the infrastructure needed to realize this goal, we can envision a framework,” says Tu Guangshao, deputy mayor of Shanghai. “We expect a stronger Shanghai to have a positive influence on China’s development and economic restructuring,” he adds.

The development has indeed boosted the entire financial industry of Shanghai. In 2008, the production value of the financial industry accounted for 10 percent of the city’s GDP, and surpassed 12 percent in 2009. Furthermore, construction of the financial center has had positive impacts on China’s service industry, business development and recovery from the global financial crisis.

This is by no means a new role for Shanghai. The city was an international financial center for the Far East in the 1930s. It was home to the headquarters of a large number of domestic and international financial institutions; its bank deposits accounted for 30 to 40 percent of the country’s total; and it served as a hub of currency exchange and issuance and influenced interest rate changes and financial market indexes.

But due to historical factors, Shanghai ranks only 35th among global financial centers according to the latest survey. “A 35th place ranking for Shanghai means that the city still has a long way to go before it can truly be called a major international financial center,” says Piter de Jong, president of ING Shanghai and a board member of the European Union Chamber of Commerce, Shanghai. He adds that in terms of infrastructure capacity, Shanghai is expected to reach an international level in five to ten years. But in terms of soft power like a stable legal environment, modes of thinking and corporate culture, it needs at least 10 to 20 years.

Dai Xianglong, former governor of China’s central bank, also believes it will be a real challenge. “We should be aware of the amount of brainwork involved in making Shanghai a global financial center. We need to consider how to promote a more open market in Shanghai and the entire delta region, and enhance interaction between Shanghai and East Asian countries. Meanwhile, we need to make breakthroughs in certain key areas, for example, enhancing China’s capitalization capability and boosting the two-way flow of international investment via Shanghai’s financial markets.”

Strength in Numbers

Here is where the satellite cities come in. Shanghai cannot succeed without strong economic support throughout the Yangtze River Delta.

Over the past 20 years, the Yangtze River Delta has been the rising star of the Chinese economy; it accounts for about a quarter of the country’s GDP. Meanwhile, as a pioneer of opening-up policies, the delta has developed an export-oriented economy. Statistics show that in 2009 its total volume of imports and exports reached US$ 804.3 billion, representing 36.4 percent of the country’s total.

A competitive group of counties and cities is one of the leading factors for the area’s rapid and sustained development. More than half of China’s top 100 counties in 2009 are located in the Yangtze River Delta, and the top ten on the Forbes’ 2009 list of China’s Best County-level Cities are from Zhejiang and Jiangsu provinces.

Take Ningbo, Zhejiang Province, for example. Prosperous trade and industry have allowed the harbor city to grow into one of the most competitive export-oriented cities in the country. Thus far, over 1,000 companies here maintain direct trade relations with nearly 200 countries and regions. Two of them handle annual imports and exports that amount to billions of US dollars; ten handle trade volumes that exceed US$ 500 million; and 98 companies are in the 100-500 million dollar range.

These cities make this region the “Golden Delta” of China, and even of the world, and form the country’s most competitive edge on the international market.

Employing the resources of the delta, Shanghai is speeding up its reconstruction towards a world financial center. Meanwhile, soaring private sectors in Zhejiang and Jiangsu are eagerly anticipating better financial services.

For Shanghai, and the Yangtze River Delta as well, the 2010 World Expo presents a great opportunity. During the eight years of preparation, the city has completed over 850 infrastructure-enhancing projects, and stimulated an annual investment growth of 30 percent across the delta. The investment increase is expected to surpass 50 percent this year. The time may be ripe for industrial upgrading of the whole delta area.