Exploring Financial Structure Optimization and Contributing Strategies to Shanghai International Financial Center Construction – The Fifth Session of Lujiazui Financial Salon in 2026 Takes the Pulse of Capacity Enhancement

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The fifth session of the “Lujiazui Financial Salon” 2026 was successfully held in Shanghai Pudong.

On March 14, the fifth session of the “Lujiazui Financial Salon” 2026 was successfully held in Shanghai Pudong.

This salon focused on “Optimizing Financial Structure and Empowering the Real Economy—Walking the Path of Chinese-Style Financial Development.” Economists, senior financial institution executives, and university experts gathered to discuss the internal logic of financial structural evolution, development trends in capital markets, and how to implement targeted policies to enhance Shanghai’s core competitiveness as a global RMB asset allocation center.

The dominance of indirect financing has changed; the economy is shifting toward innovation-driven growth.

Lian Ping, Chairman of the China Chief Economist Forum, President and Chief Economist of Guangkai Industry Research Institute, delivered a keynote speech, systematically explaining the core features and deep drivers of China’s financial structural reforms, as well as their strategic significance for building Shanghai into an international financial center.

Lian Ping pointed out that building a strong financial nation involves six key elements: a robust monetary system, central bank, international financial center, financial institutions, regulatory system, and talent pool. Continuous optimization of the financial structure is the underlying logic running through all these elements. China’s indirect financing scale has stabilized at the top globally, but there is still significant room for growth in direct financing. In recent years, China’s financial system has undergone major and profound structural changes.

“China’s financing structure is showing clear directional changes,” Lian Ping said. The proportion of incremental indirect financing fell below 50% for the first time in 2024, and in 2025, direct financing’s incremental share first surpassed that of indirect financing, changing the long-standing dominance of indirect financing. The stock proportion of direct financing also steadily increased, reaching 32% in 2025, up 4.7 percentage points from the end of 2019. Data released for January-February 2026 continues this trend, with credit growth around 6%, and social financing scale growth exceeding 8%.

Regarding the main contributions of direct financing, Lian Ping noted that bond financing, with its stability and flexibility, has become an important support for social financing growth; equity financing has achieved rapid development, with the STAR Market, ChiNext, and Beijing Stock Exchange working together, and increased activity in private equity, venture capital, and government industrial funds, better matching the financing needs of tech and innovative enterprises.

Since 2020, the growth rate of indirect financing has generally declined, and after 2024, its absolute scale is also decreasing. So, what internal adjustments have occurred within indirect financing? Lian Ping explained that credit growth to households has sharply slowed, with only over 400 billion yuan added in 2025, a significant decline from the average annual increase of 5.9 trillion yuan over the previous decade; corporate credit remains stable, with relatively active financing needs in emerging industries.

What drives the changes in the financial structure? Lian Ping believes that the fundamental force is the transformation and upgrading of the economic structure. Specifically, China’s economy is shifting from investment-driven, traditional industry-led to innovation-driven, emerging industry-led development. Tech and strategic emerging industries are characterized by light assets, high R&D investment, long R&D cycles, and high uncertainty, making it difficult for banks to meet their credit standards based on collateral and low risk preferences. These industries’ risk-return profiles are better suited to direct financing. This creates demand for equity, bonds, and venture capital, which are the core drivers of financial structural optimization. Additionally, policy efforts continue to support this transformation. Lian Ping noted that proactive fiscal policies have rapidly expanded government bond financing, becoming a key driver for increasing direct financing. There is an inherent need for the corporate sector to deleverage steadily; developing equity financing helps alleviate debt pressure and boost operational vitality. Innovation in government investment and financing models, enhanced financial regulation, and widespread application of financial technology all work together to reduce costs, improve efficiency, and broaden channels for direct financing.

“Demographic changes and cyclical shifts in the real estate market also create favorable conditions for the development of direct financing,” Lian Ping further explained. Young people’s investment awareness is increasing, gradually becoming important participants in capital markets. More social funds are shifting from traditional savings to capital market allocations, providing stable funding sources for direct financing.

Looking ahead, what are the development trends of the financial structure? Lian Ping believes that accelerating the expansion of equity financing will become the core driver of direct financing development. Government bonds will continue to play a fundamental role in stabilizing the market. The proportion of direct financing in China is expected to continue steadily increasing.

Lian Ping recommends that future efforts should deepen the reform of the comprehensive registration system, improve support systems for direct financing of small and medium-sized enterprises, optimize credit rating mechanisms, cultivate high-quality intermediary institutions, strengthen the protection of investors’ legal rights, leverage financial technology to enhance risk control and market efficiency, and promote the sustained healthy development of the direct financing market.

Regarding the positive role of capital markets in building an international financial center, Lian Ping believes it is mainly reflected in four aspects. First, strengthening the capital market can effectively address the shortcomings in equity financing, creating a safe, standardized, transparent, open, vibrant, and resilient market, attracting more long-term funds and providing sufficient liquidity for direct financing. Second, promoting deep integration between the financial center and the science and technology innovation center can precisely support high-tech and emerging industries through equity financing, enabling mutual empowerment of technology and finance. Third, establishing the RMB asset global allocation center can broaden residents’ income channels and enhance global investors’ willingness to allocate RMB assets. Fourth, supporting high-level financial opening and RMB internationalization can attract global financial institutions, increasing Shanghai’s influence in global financial resource allocation and pricing.

Optimizing the financial structure requires coordinated advancement across three dimensions.

Zhang Wen, Chairman of China Trust & Investment Corporation, shared insights from industry practice on trust’s unique role and innovation in optimizing financial structure and serving the real economy.

Zhang Wen believes that optimizing the financial structure should be driven by three coordinated efforts: increasing the proportion of direct financing, clarifying the functions of financial institutions, and guiding funds to focus on the “five major articles” of finance. Trust companies, with their institutional advantages and long-term capital management capabilities, can play an irreplaceable role in this process.

Leveraging trust companies’ strengths, Zhang Wen explained that trusts have a natural advantage in long-term capital operation, providing sustained and stable “patient capital” for tech startups, becoming a “sower” of long-term capital, and aligning well with Shanghai’s goal of building a science and innovation center. To address the limited exit channels for tech startups, trusts can cooperate with the government to establish tech-focused S-Foundations, facilitating capital circulation and enhancing direct financing functions.

“In recent years, the trust industry has accelerated transformation and innovation, continuously expanding direct financing channels,” Zhang Wen said. Trust business has shifted from traditional channels and non-standard assets to standardized assets, vigorously developing bonds, REITs, and asset securitization products, focusing on fields like tech innovation, urban renewal, and public welfare, creating integrated “equity + debt + service” solutions, and launching services like elder care and wealth inheritance to improve financial service precision and coverage.

Finally, Zhang Wen mentioned that, relying on Pudong’s legislative and reform advantages, the trust industry can actively develop “Shanghai standards,” pilot in areas like family trusts and pension trusts, promote the improvement of trust property registration and tax systems, address institutional gaps, and enhance Shanghai’s leadership in financial rules and innovation practices.

Shanghai needs to develop offshore finance and connect offshore and onshore markets.

Yin Desheng, Dean of the School of Economics and Management at East China Normal University, focused on the key tasks of building a financial powerhouse during the 14th Five-Year Plan, interpreting Shanghai’s path to enhancing its international financial center from an openness perspective.

Yin Desheng explained that during the 14th Five-Year Plan, China’s financial work aims to accelerate the construction of a financial powerhouse, focusing on seven key areas, including science and technology finance, digital finance, inclusive finance, green finance, pension finance, and deepening comprehensive reforms of the capital market and expanding high-level financial opening.

How to deploy these strategies? Yin Desheng said that science and technology finance should build mechanisms compatible with technological innovation, strengthen long-term capital support for early-stage, small-scale, and hard-tech investments, assist high-quality tech companies in listing and issuing bonds, develop a “tech board” in the bond market, expand venture capital, improve foreign investment facilitation, and perfect the tech insurance system.

Digital finance should focus on infrastructure and digital RMB, building high-quality data sets across energy, transportation, manufacturing, education, health, and finance sectors.

Inclusive finance should support private enterprises, expand consumer finance, and serve rural revitalization; green finance should enrich product offerings, promote carbon finance innovation, and improve assessment mechanisms; pension finance should respond to the national aging strategy by increasing pension financial services.

Comprehensive reforms in the capital market should deepen the coordination of investment and financing, increase the share of direct financing, develop diverse equity financing, accelerate multi-tier bond markets, steadily develop futures, derivatives, and asset securitization, and optimize issuance, disclosure, M&A, and delisting systems to improve the quality of listed companies.

In terms of financial opening, the 14th Five-Year Plan proposes to enhance RMB exchange rate flexibility, keep it stable at a reasonable and balanced level, and accelerate the construction of Shanghai as an international financial center. It also emphasizes RMB internationalization, expanding its use in international trade and investment, increasing the openness of the capital account, developing an independent and controllable cross-border RMB payment system, and developing the offshore RMB market.

Yin Desheng stated that Shanghai’s international financial center is at a critical stage of capacity enhancement. While Shanghai has advantages in location, history, and industry base, it still faces issues such as insufficient internationalization, limited channels for residents’ savings to convert into investments, and an imperfect RMB repatriation mechanism. He pointed out that currently, there is some disconnection between overseas RMB investment channels and the benefits brought by China’s onshore modern industrial system. Therefore, he recommends that Shanghai develop offshore finance and connect offshore and onshore markets.

Shanghai’s international financial center can focus on investment management, professional services, and financial technology.

Zhao Wei, Chief Economist of Shenwan Hongyuan Securities and Vice Chairman of the Development Strategy Committee of the China Securities Industry Association, analyzed the opportunities, shortcomings, and pathways for Shanghai’s international financial center from a global perspective.

Zhao Wei believes that China’s economic restructuring has achieved remarkable results, having started around 2011 and now entering a mid-to-late stage. Industrial breakthroughs are fully realized, technological innovations are spreading rapidly, and export resilience remains strong, providing a solid foundation for financial development and Shanghai’s international financial center.

However, Zhao Wei also pointed out that, amid industrial iteration, China still has room to improve in RMB internationalization and the construction of an international financial center. For example, while the share of RMB in trade transactions has continued to rise over recent years, its proportion in global foreign exchange reserves remains relatively low.

“The ‘14th Five-Year’ period is a critical phase for China’s comprehensive economic restructuring,” Zhao Wei said. During this period, financial development will accelerate, and for Shanghai, it is a strategic opportunity to build an international financial center. What areas should be prioritized?

From a global perspective, Zhao Wei noted that, according to the 38th issue of the Global Financial Centers Index (GFCI) in 2025, Shanghai ranks eighth. It performs well in banking, insurance, financing, trading, government, and regulation, but is relatively weaker in investment management, professional services, and financial technology, which are key focus areas.

“Shanghai’s advantages in building an international financial center are multiple,” Zhao Wei said. First, as a science and innovation hub, Shanghai has a strong industrial foundation. Second, the abundant liquidity environment provides capital support and innovation soil. Third, its historical background gives it international recognition. Fourth, as a reform frontier, Shanghai has clear advantages.

“However, Shanghai still faces some bottlenecks,” Zhao Wei admitted, including the need to improve the internationalization of its financial markets, institutions, and businesses; further open RMB capital accounts; and enhance the openness of financial infrastructure and product innovation.

There is room for equity markets and offshore RMB assets.

Ouyang Liliang, CEO of AIA Asset Management, shared insights from insurance asset management practice, offering suggestions on Shanghai’s international financial center development and optimizing the investment and financing ecosystem from talent, tools, and ecosystem perspectives.

Ouyang Liliang believes that Shanghai’s banking, insurance, and regulatory sectors have reached top global levels, with financial technology ranking seventh worldwide. However, its human capital index is relatively lower. He sees this not as a bottleneck but as an important direction for enhancing international competitiveness. China has a large and solid base of science and engineering talent, and future policies could further attract global experts to Shanghai, promoting cross-border flow of capital, technology, and ideas.

“Beyond evaluation results, we should also consider what internal strengths need to be strengthened,” Ouyang Liliang said. Since the central financial work conference emphasized the importance of the “five major articles” of finance, innovative tools like science and technology bonds and commercial REITs have been introduced. New economic fields such as computing power and energy storage are emerging as new growth points for asset management, but gaps remain in the market. He explained that for insurance funds, there is room for configuration in the equity market and offshore RMB. This can help address domestic low interest rates and asset shortages, while also supporting overseas Chinese-funded enterprises’ financing and promoting coordinated development of onshore and offshore markets.

Furthermore, with ongoing improvements in government fund investment, financing, and withdrawal systems, liquidity in the primary equity market is rising, enhancing China’s direct financing capacity and approaching international leading levels. Ouyang Liliang suggested diversifying overall financing risks through pooled loan tools to match different risk preferences. Under various future industry development scenarios, these emerging fields could become benchmark investment projects. Shanghai has the capacity to leapfrog and surpass traditional international financial centers.

The “Lujiazui Financial Salon” is guided by the Shanghai Municipal Financial Office and the Pudong New Area Government, organized by the Lujiazui Financial Salon Secretariat, with media support from Yicai and Cailian Press. This series aims to establish a regular exchange platform echoing the “Lujiazui Forum,” through institutionalized, scenario-based, and international operations, continuously showcasing financial reform “Pudong Wisdom,” deeply empowering Pudong’s high-quality economic development, and pushing Shanghai’s core financial district to new heights.