The financial partnership between Shanghai and the City of London has taken another step forward with the signing of a new Memorandum of Understanding (MoU) on March 20. The agreement, valid until 2028, reinforces a four-decade-long relationship and expands collaboration in key areas such as digital finance, green finance, and offshore renminbi markets.

Strengthening Financial Connectivity

Alderman Alastair King, Lord Mayor of the City of London, emphasized the significant opportunities for deeper cooperation between the two financial centers. The MoU sets the stage for further market connectivity, knowledge sharing, and financial innovation, aligning with broader trends of international capital flows and regulatory collaboration.

Shanghai has actively positioned itself as a global asset management hub, particularly within the Lujiazui financial district. The area now hosts over 8,000 financial institutions, including 80% of China's foreign asset managers and 40% of its foreign banks. This ecosystem has been a key attraction for global firms seeking to establish a foothold in China's expanding financial markets.

Aspect Capital's China Expansion: A Case in Point

UK-based Aspect Capital exemplifies the growing presence of international financial firms in Shanghai. The firm registered its China operations in Pudong in early 2024 and quickly advanced its footprint, securing approval as a wholly foreign-owned private fund manager (PFM) by December. By early 2025, it had launched multiple fund products and submitted an application to become a Qualified Domestic Limited Partner (QDLP), which would allow it to raise capital from Chinese investors for offshore investments.

"China's financial market is showing remarkable dynamism, and we see substantial opportunities in wealth management and quantitative strategies," said Lin Han, General Manager of Aspect Capital China. "We plan to expand our local team, apply for more business licenses, and seek strategic partnerships with domestic financial institutions."

Policy Support Fuels Market Access

China's commitment to financial market liberalization has been evident through initiatives such as the Qualified Foreign Institutional Investor (QFII) and QDLP programs, which allow foreign institutions to participate in domestic investments. At the 11th China-UK Economic and Financial Dialogue in January, both sides reiterated their commitment to financial cooperation, paving the way for further integration of their capital markets.

Recent regulatory developments have also supported international participation. On March 4, China's five major futures exchanges expanded QFI access to 75 futures and options contracts, providing global investors with enhanced risk management tools and asset diversification opportunities. Lin highlighted this as a milestone in China’s financial market opening, emphasizing its benefits for international investors seeking exposure to China's commodities and derivatives markets.

A Broader Landscape of Foreign Investment

Shanghai's attractiveness to foreign financial firms extends beyond asset management. BNP Paribas Securities China officially opened its Shanghai office in March, marking the latest entry of a foreign brokerage into China's market. The firm aims to leverage its international expertise to expand cross-border and securities services for both domestic and offshore clients.

Meanwhile, global reinsurance giants AXA and Hannover Re have established reinsurance centers in Shanghai, reinforcing the city's role as a regional risk management hub. The strategic location of AXA’s operations in the Lingang Special Area enables seamless integration with the Shanghai International Reinsurance Exchange, facilitating efficient data flow and greater market transparency.