A man walks at the financial district of Pudong in Shanghai. Reuters

SHANGHAI: China’s commercial capital of Shanghai is still far from its goal of becoming a global financial hub by 2020 due to hurdles such as capital controls and a lack of consistent rules, a report by a US business lobby group said on Thursday.

The American Chamber of Commerce in Shanghai said that for the city to become a financial centre on par with London or New York, China should make its yuan currency fully convertible, improve transparency and lift internet restrictions in the city.

China’s State Council, or cabinet, announced plans a decade ago to build Shanghai into an international financial centre by 2020.

The AmCham Shanghai report, titled “Shanghai 2020: A Financial Vision Unfulfilled,” drew conclusions from a recent survey with financial industry executives.

“In China, capital controls show little sign of being lifted. But unless they are, Shanghai’s international financial centre status ambitions will come to naught,” said the report.

AmCham Shanghai urged China to make its currency fully convertible, arguing that otherwise, “it’s difficult to envisage Shanghai ever achieving its ambition.”

It also said Shanghai should make rules transparent and predictable in financial markets, while removing excessive regulation and creating a level playing field.

Shanghai officials could not immediately be reached for comment.

In January, eight Chinese regulators issued an action plan for the city to become a leading global financial market by next year, state media reported.

Most respondents to the AmCham survey said it was more difficult to obtain a licence in Shanghai than in other financial centres, with several executives citing the absence of recognisable “standards” in the approval process as a fundamental weakness, the report said.

They also noted the practice in Shanghai of window guidance, or unofficial instructions from regulators. Foreign banks believe such communication is provided earlier to domestic banks than to their Western peers, putting foreign businesses at a disadvantage.

“One prerequisite for international financial centre status is that all banks, domestic or foreign, be treated equally,” AmCham Shanghai said.

The recommendations also included one that asked Beijing to ease internet restrictions by lifting the so-called Great Firewall in Shanghai’s financial zone to give its citizens access to Google and other sources of information, touching on one of the most politically sensitive areas in China.

“China’s internet restrictions severely handicap Shanghai’s global financial centre ambitions,” the report said.

Reuters