The number of multinational corporations setting up their regional or Asian headquarters in Shanghai hit the 700 mark in August.

Among them, 106 companies including Apple, Tesla, General Motors, HP, Philips, Coca-Cola, ExxonMobil, German chemical giant Basf and others use the city as a base, managing their manufacturing and logistics across Greater China and even the entire Asia Pacific region.

Behind the sizeable cluster of head offices are the 4,661 new foreign investment projects registered in the first eight months, up 47.8% year on year, pooling US$13.07 billion, as Shanghai continues to reel in foreign capital.

The lion’s share of the money, or $11.57 billion, went into Shanghai’s service and financial sectors, according to statistics released by the city’s government.

The overall presence of foreign firms in Shanghai is comparable with Hong Kong, claimed a Shanghai official, although at present more Western firms run their Asian head offices from the former British colony.

The long-standing, interwoven relations between Shanghai and Hong Kong, when the former was a prime source of the flow of capital and talent to Hong Kong before 1949, shifted back to economic rivalry from 2000 onwards, especially after Shanghai surpassed Hong Kong in terms of gross domestic product for the first time in 2011.

Shanghai’s annual economic output is now one third larger than Hong Kong’s and will further edge up the elite league of the world’s top 10 in the near future, according to two separate rankings of urban agglomerations compiled by PwC and McKinsey.

Shanghai, with a population of 25 million, boasts the largest GDP in the Greater China region and is only after Tokyo and Seoul throughout Asia. Photo: Asia Times

Shanghai cadres are heartened by a special mention from the London Stock Exchange in its letter of rejection regarding a US$36.6 billion merger proposed by the Hong Kong bourse, a deal that was announced earlier this month.

The London trading house noted it valued the mutually beneficial partnership with the Shanghai Stock Exchange as its “preferred and direct channel” to access the many opportunities with China and that Hong Kong’s proposal did not meet its strategic objectives, nor did the Hong Kong bourse offer the best long-term listing and trading platform for China.

Shanghai launched its stock connect with London in December 2018, and it has also been running a shared trading platform with Hong Kong since 2014. The city also boasted a stock market capitalization of $5.01 trillion as of May, larger than Hong Kong’s, with a daily turnover three times Hong Kong’s.

Shanghai’s financial sector booked an annual output of 578.2 billion yuan in 2018, compared with Hong Kong’s corresponding figure of about 550 billion yuan.

The city is also doubling down on reforms and liberalization of regulations and capital flows within its expanded pilot free trade zone, which aims to gradually ease restrictions on two-way flows of capital between the FTZ and offshore markets, as stated in a masterplan promulgated by the State Council and People’s Bank of China, China’s central bank.

Read more: Beijing pushes Shanghai, Shenzhen to eclipse HK