Mar. 3 – A political advisor and member of the 11th National Committee of the Chinese People’s Political Consultative Conference (CPPCC) said that China will need to establish a clearing bank in Shanghai to help its growth as a global financial center.

Ji Xiaohui told Xinhua: “Setting up a clearing bank is an important step in building a global financial center inside a country.”

The presence of a payment and settlement system is the basic platform needed to build an international financial center the likes of New York, London and Hong Kong where international payment and settlement can be done at the same time.

In comparison to these cities, Shanghai has a weak regional payment and settlement system because the country’s national payment system is operated from the central bank with its national processing center located in Beijing and connected to centers in various provinces.

Ji advised that a center in Shanghai would work to work in tandem with the center in Beijing as well as provide backup copies for each other while payment and settlement can be switched between the two centers in real time.

There is a need to move the main function of the national center to Shanghai in order to set- up an independent, market-oriented, and national-level clearing bank.

The government should set up or allow local banks to establish a foreign-currency clearing bank in Shanghai, which could serve as a foundation for possible cross-border transactions, added Ji.