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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China Securities Journal, March 18 — On March 14, the fifth session of the “Lujiazui Financial Salon” 2026 was successfully held in Shanghai Pudong.

This session 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, Director of Guangkai Industry Research Institute, and Chief Economist, delivered a keynote speech 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 framework, and talent pool. Continuous optimization of the financial structure is the underlying logic running through all these elements. While China’s indirect financing scale remains the largest globally, there is still significant room for direct financing development. Recently, China’s financial system has undergone major and profound structural changes.

“China’s financing structure is showing clear trends,” 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 surpassed that of indirect financing, breaking the long-standing dominance of indirect financing. The stock proportion of direct financing has 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, due to its stability and flexibility, has become an important support for social financing growth; equity financing has developed rapidly, with the STAR Market, ChiNext, and Beijing Stock Exchange working together, and increased activity in private equity, venture capital, and government industrial funds, better meeting 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 drop 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 change in financial structure? Lian Ping believes that the transformation and upgrading of the economic structure is the fundamental force behind financial structural changes. 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 more suited to direct financing. This creates demand for equity, bonds, and venture capital, which are core drivers of financial structure 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 also an inherent need for enterprises to reduce leverage, and developing equity financing helps ease debt pressures and boost operational vitality. Innovation in government investment and financing models, enhanced regulatory capacity, and widespread application of financial technology collectively help 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 is the development trend of the financial structure? Lian Ping believes that the accelerated 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 registration-based issuance system, improve direct financing support for 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 future 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 resource allocation and pricing.

Optimizing the financial structure requires coordinated efforts across three dimensions.

Zhang Wen, Chairman of China Trust Trust Co., Ltd., shared insights from industry practice, emphasizing trust’s unique role and innovative directions in optimizing financial structure and serving the real economy.

Zhang Wen believes that optimizing the financial structure should be pursued from three aspects: 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.

He explained that trust companies have inherent advantages in long-term capital operation, providing sustained and stable “patient capital” for tech and innovative enterprises, making them ideal for long-term investment. To address the limited exit channels for tech startups, trust can cooperate with the government to establish tech innovation seed funds, 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. Focus areas include tech innovation, urban renewal, and livelihood security, with integrated “equity + debt + services” solutions, and new trust services such as elder care and wealth inheritance, improving financial service precision and coverage.

Finally, Zhang Wen mentioned that leveraging Pudong’s legislative and reform advantages, the trust industry can actively develop the “Shanghai standard,” pilot in areas like family trusts and elder trusts, and promote the improvement of trust property registration and tax systems, addressing institutional gaps and enhancing Shanghai’s leadership in financial rules and innovation.

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 key tasks in the “14th Five-Year Plan” for building a strong financial nation, interpreting Shanghai’s path to enhance 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 technological finance, digital finance, inclusive finance, green finance, pension finance, and deepening comprehensive reforms of capital markets and expanding high-level financial opening.

How to deploy these tasks? Yin Desheng said that technological finance should build mechanisms compatible with technological innovation, support long-term capital for hard tech, help tech enterprises go public and issue 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.

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

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

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 aims to promote RMB internationalization, expand its use in trade and investment, open capital accounts, develop a cross-border RMB payment system, and grow the offshore RMB market.

Yin Desheng stated that Shanghai’s international financial center is at a critical stage of capacity enhancement. While Shanghai has advantageous 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 there is a certain disconnect between overseas RMB investment channels and the benefits brought by China’s onshore modern industrial system. Therefore, he recommends developing offshore finance and connecting 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 since its initiation around 2011, now entering a mature phase. Industrial breakthroughs are materializing, 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 despite industrial progress, there is room for further improvement in RMB internationalization and the construction of an international financial center. For example, the share of RMB in trade transactions has risen over recent years, but 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 cited data from the 38th issue of the Global Financial Centers Index (GFCI), where 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 noted. First, as a major science and innovation hub, Shanghai has a strong industrial foundation. Second, the abundant liquidity environment provides financial support and innovation soil. Third, its historical background grants 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 level of its financial markets, institutions, and businesses, further open RMB capital accounts, and enhance financial infrastructure openness and product innovation.

Equity markets and offshore RMB have certain allocation potential.

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

Ouyang Liliang believes Shanghai’s banking, insurance, and regulatory sectors are among the top five globally, and its fintech ranks seventh worldwide. However, its human capital index is relatively lower. He sees this not as a bottleneck but as an important direction for improving international competitiveness. China has a large and solid base of STEM talents, 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 strengthening,” Ouyang Liliang said. Since the central financial work conference emphasized the importance of the “five major articles” of finance, innovative tools like tech bonds and commercial REITs have been introduced, and new economic sectors like computing power and energy storage are emerging as new growth points. The market still has gaps, he explained. For insurance funds, there is room for allocation in equity markets and offshore RMB, which can help address domestic low interest rates and asset shortages, as well as support overseas Chinese-funded enterprises’ financing, promoting coordinated development of onshore and offshore markets.

Furthermore, with ongoing reforms in government funds’ investment, financing, regulation, and withdrawal systems, liquidity in the primary equity market is improving, bringing China’s direct financing closer to international standards. 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, and 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 Pudong New Area Government, organized by the Lujiazui Financial Salon Secretariat, with media support from First Financial and Cailian Press. This series aims to establish a regular communication 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 international financial center core area to new heights.