Sector slated to grow by 15 percent in Q1

By the end of last year, 34 foreign-invested banks had branches in Qingdao, accounting for 90 percent of the province's total number of foreign financial institutions.

"Qingdao is a thriving city and its financial market is appealing," said Gao Feng, president and chief country officer of Deutsche Bank China. "We believe its business environment will enable us to gain tremendous success in this city."

Many financiers like Gao said they see tremendous prospects in the city's financial sector because of the city's geographic advantages, strong industrial foundation, government support and preferential policies.

Officials believe the financial sector will grow by 15 percent in the first quarter of this year.

In February 2014, Qingdao gained approval from the State Council to build the Qingdao Wealth Management Financial Comprehensive Reform Pilot Zone. Since then, city officials have poured in efforts to develop the city's financial sector.

Li Qun, Party chief of Qingdao, said he and other city officials will make "all-out efforts to achieve the goal of creating a wealth management sector in China with a significant international presence".

The city has formed a leadership group, headed by Qingdao Mayor Zhang Xinqi, to establish a development plan for its financial industry.

Officials at all levels are reportedly learning about the industry and gaining insights from attending high-level financial events.

Taking the reins

As a national pilot zone, the city has taken the lead in China's financial policy reforms.

It has implemented 35 new financial reform policies, including mortgage plans to benefit small and medium-sized high-tech companies with loan financing, pilot programs for qualified foreign and domestic partners, allowing overseas investors to convert foreign currencies into yuan for private equity investments in China and raising funds for overseas investments.

In June 2015, Qingdao became the first pilot city to allow its companies to obtain loans in renminbi from South Korean banks.

Guo Qiang, general manager of Sinopal, a local company specializing in electrical machine research and development and the first company to try the financing channel, said the reform allows the company access to low-cost financing.

The interest rate for loans in renminbi is about 4.5 percent in China, while the interest rate ranges from 3.8 percent to 4 percent from South Korean banks.

Twenty-five companies in Qingdao have obtained loans in renminbi from South Korean banks at a total contract value of 2.65 billion yuan ($407.9 million). Thus far, 2.33 billion yuan in loans have been loaned out, helping save a combined financing cost of 53 million yuan for enterprises.

Officials said financial reforms have spurred rapid growth in profits for the financial industry, in the number of financial institutions and allowed the stock market in Qingdao to surge.

In 2010, the financial industry contributed to 4.2 percent of Qingdao's gross domestic product. By 2015, that grew to 6.3 percent. In 2015, profits generated from the financial sector amounted to 58.8 billion yuan, 2.5 times higher than in 2010.

By the end of 2015, there were 221 financial institutions operating in Qingdao.

There are nearly 500 financial companies in various forms, including funds and asset management companies.

It has attracted 11 banks to set up private banking branches for a combined asset value of 70 billion yuan.

Asset-trading platforms have sprung up in the city, including the Qingdao Over-the-counter Clearing House, the Qingdao International Marine Property Exchange Center, Haier United Credit Asset Trading Center and the Arts Exchange Center.

More than 300 companies have been listed in the Qingdao Blue Ocean Equity Exchange, a regional equity trading market.

The market's total transactions for the past year exceeded 10 billion yuan, raising more than 2.7 billion yuan for companies. It has also begun cooperation with South Korea's Kosdaq market.

Wang Daoyun, chairman at the Blue Ocean Equity Exchange, said "the exchange has become a 'holy destination' for startups. Although my workload is heavy, I am thrilled to see these promising companies grow rapidly after getting funded at our platform."

The city's achievements have recently been recognized by Z/Yen Group, a London-based research institution. Last week, it released the Global Financial Centres Index, with Qingdao ranked 79th among the world's leading financial centers, the first time Qingdao has been listed among the top 100.

The booming financial industry is helping Qingdao buffer the overall slowdown in the Chinese economy, Li Qun said.

Help for SMEs

In 2015, the city's GDP reached 930 billion yuan, a 8.1-percent rise from 2014. Its service industry grew 9.4 percent to 491 billion yuan, or 52.8 percent of total GDP.

Li Qun said Qingdao's economy has historically been dominated by large enterprises such as Haier and Hisense, but the rise of the financial and asset management sectors could help funnel funding to its small and medium-sized enterprises.

"The economy could only be sustainable and dynamic when its industrial giants and SMEs reach a balance. Small businesses must be allowed to grow vibrantly. I am proud to say that the financial sector has proved to be the remedy to this transition."

Picturesque base

Adjacent to the picturesque Laoshan Mountain, Jinjialing was chosen as the core area for the national wealth management reform pilot zone in Qingdao.

Over the past two years, it has gained tremendous growth momentum in its aim to be among China's leading financial districts. It has attracted more than 170 funds, raising more than 100 billion yuan.

Wang Zhengrong, general manager of Shandong Financial Asset Management Qingdao, recently moved into his new office in the CMB Tower in Jinjialing.

"Many financial institutions are swarming to build operations in the area for its natural environment, infrastructure, preferential policies and the atmosphere of dynamic growth in finance," he said, pointing to a number of high-end office buildings beyond his window.

In 2014, Qingdao's first independent insurance company, Qingdao Zhonglu Insurance, opened for business in Jinjialing.

The Lanhai Equity Exchange, which has been operational since April 2014, is dedicated to developing a multi-tier capital market in the area. Qingdao Rural Commercial Bank opened their headquarters in Laoshan with registered capital of 5 billion yuan, while CITIC Securities has invested 3 billion yuan in the area.

Five equity funds operate with a combined capital of 27 billion yuan in the zone. The concentration of financial institutions has brought remarkable economic growth to the area.

Through the first two months of this year, tax revenue generated from the financial sector in Jinjialing reached 740 million yuan; total loans and deposits in local banks hit 342 billion yuan and 280 billion yuan respectively, increases of 2 percent and 4 precent from the same period last year.

Total transactions in local stock exchanges reached a 400-billion-yuan record. Premiums in the insurance industry achieved 340 million yuan and deposits in local trusts reached 157.1 billion yuan.

zhuanti@chinadaily.com.cn