Shanghai's Development Strategy Toward 2030 – Elevating the 'Five Centers'

Editor's Note:

The International Business Leaders' Advisory Council for the Mayor (IBLAC) brings together top executives from leading multinationals to share insights on Shanghai's development strategy. Each company brings forward a paper that draws from its global practices as well as local insights. Shanghai Daily has selected and summarized some of the most insightful recommendations for the city.

The development of an international economic, financial, trade, shipping and sci-tech innovation center will be the main thrust of Shanghai's endeavor in the future. Given that the city's "five centers" initiative requires it to participate in global competition and collaboration, what can Shanghai do to elevate the capabilities and international standing of the "five centers"? Benchmarking against the world's top cities, how can Shanghai further shape its differentiated competitive advantages in the future?

Openness, Shanghai's paramount advantage, is a key determinant for numerous foreign enterprises in their decisions to establish and maintain their presence in the city. What are the challenges and requests of foreign-invested enterprises concerning resource acquisition, market access, and business operation? What perspectives and suggestions can Shanghai use in its ongoing efforts to promote opening-up in critical sectors such as finance, health care and telecommunications?

China is important to multinational corporations (MNCs), not only as a consumption market, but also for its supply chain and innovation ecosystem.

China is an important consumption market, manufacturing/supply chain hub, and research and development (R&D) center for MNCs. It is important not only for serving the large domestic market, but also for the rest of the world.

As the second-largest consumption market globally, China is a key consumer market for MNCs. It represented about 15 percent of global revenue for the top 200 MNCs, with an even larger share in some sectors, such as consumer goods and automobiles.

In a recent survey, about 70 percent of MNCs indicated that they are not considering relocating their supply chains away from China. The top three reasons cited for having a supply chain in the country are: huge domestic market, complete industrial chain, and good infrastructure.

A recent survey indicated that 57 percent of MNCs believe China's innovation ecosystem played a significant role in boosting their global competitiveness. There is a vast and growing pool of R&D talent in the country, where the number of R&D-focused FTE (full-time equivalent) has more than doubled over the last decade to 7.2 million in 2023 (from 3.5 million in 2013). The number of R&D institutions in the higher education sector has also more than doubled over the same period, with increasing investments in this area.

On the other hand, MNCs have also contributed to the city's development. They are deeply rooted in Shanghai and bring valuable benefits to the economy, especially in building the connectivity to different parts of the world.

What insights and recommendations do foreign-invested enterprises offer to accelerate the development of Shanghai's modern service sector, particularly in enhancing the capabilities of information, technology, and professional services industries?

There are quite a few potential opportunities that Shanghai could capture to further shape its differentiated competitive advantages and accelerate its development in its 15th Five Year Plan (2026-2030).

Capture faster-growing corridors

Shanghai is well-positioned to further capture and facilitate the growing flows to ASEAN (Association of Southeast Asian Nations) markets and the Middle East where China has been deepening its connectivity. The city should play a more proactive role as a cross-border flows connector, capture opportunities in the ASEAN corridor, and unleash the potential of the Middle East corridor.

Further accelerate innovation-related efforts

Despite recent challenges, China's innovation ecosystem remains resilient. Shanghai can play an important role in further developing diversified sources of funding and in capturing the emerging open-source opportunity, as a connector to the rest of China and the world. The city should create an ecosystem with diversified sources of funding and become an advocate for the emerging open-source opportunities.

Seize RMB internationalization potential

There are significant opportunities in RMB internationalization amid growing interests from market participants seeking to diversify their currency exposure. Tokenization could be a potential catalyst to accelerate relevant developments.

The global landscape is expected to be shaped, to a significant extent, by the rise of innovative technologies, amidst changing geopolitics. These changes will likely bring new opportunities for the global economy. Shanghai is very well positioned to capture them as it continues to connect the different ecosystems both within the country and to rest of the world.

By embracing openness, Shanghai can further increase its competitiveness amongst international centres, fostering sustainable economic development, addressing the evolving changes in the global landscape, and, finally, achieving its 2035 goals.