The dramatic transformation of paddy fields into the 'Wall Street of China'

Editor’s note:

Rome wasn’t built in a day. Neither was Shanghai. Once dubbed "the Paris of the East,” the city has evolved into a fusion of multiculturalism. Along the way, Shanghai has accumulated a repository of stories about the people and events that have shaped its history. Five areas of the city occupy pride of place in that journey: People’s Square, Jing’an Temple, Xujiahui, Lujiazui and Xintiandi. This series, a collaboration with Shanghai Local Chronicles Library, visits them all to follow in the footsteps of time.

Once muddy paddy fields and farmland, the Lujiazui area on the eastern banks of the Huangpu River was so dramatically transformed in just two short decades that it came to be called the “Wall Street of China.”

Reviving Shanghai’s 1930s heyday as the Far East’s financial hub, Lujiazui in the Pudong New Area was developed with a high-rise skyline that has come to symbolize Shanghai and a commercial register that includes the stock market, international banks and other foreign financial institutions.

In September 1995, the Shanghai branch of Japan’s Fuji Bank opened in Lujiazui, becoming the first foreign bank to establish a presence in the area. By 2020, when Pudong celebrated 30 years of development, 17 foreign-funded banks had incorporated there.

Lujiazui’s springboard to international status began in April 1990 when the central government unveiled its plan for the development of Pudong. That was followed by an easing policy that allowed foreign financial institutions to open branches in Shanghai.

In December 1996, Pudong was granted approval to become a “pilot zone” for foreign banks to engage in limited yuan operations. For foreign banks eager to tap China’s growing markets, an address in Pudong became essential.

In late 2001, HSBC invested US$33.2 million to acquire 4,800 square meters of office space at 101 Yincheng Road E. and secure the naming rights to the building. This marked a new chapter for the building, where a range of foreign banks, including the Bank of Tokyo-Mitsubishi UFJ, Wing Lung Bank, Westdeutsche Landesbank, ING Bank and Fuji Bank, set up Shanghai branches.

Citigroup followed suit in 2002, signing an agreement with a local property developer to relocate its China headquarters to Lujiazui. Three years later, a 42-story skyscraper bearing Citigroup’s logo rose along the waterfront. The building later attracted other global financial institutions and companies to set up operations there.

As more foreign banks flocked to Lujiazui, China Merchants Tower (Shanghai) and Marine Tower on Pudong Road S. became two earliest hubs for overseas banks, including BNP Paribas, Standard Chartered and Sanwa Bank.

With China’s entry into the World Trade Organization, foreign banks were allowed to provide personal yuan services in 2007 but were required to be locally incorporated. This prompted many foreign banks to convert their operations into locally incorporated branches.

The establishment of the Shanghai Free Trade Zone in 2013 and a new round of financial industry opening-up policies starting in 2018 expanded opportunities for foreign banks.

In 1995, the Shanghai branch of the People’s Bank of China moved to Lujiazui, taking the lead among Chinese financial institutions in supporting Pudong’s development. Following in the footsteps of China’s central bank, the nation’s four biggest state-owned banks — the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China and China Construction Bank — moved their Shanghai branches to Lujiazui.

In October 2002, the Bank of Communications became the first state-owned lender in China to set up its headquarters in Pudong.

By the late 1990s, Lujiazui had also become home to trading markets. The Shanghai Stock Exchange relocated there in 1997, followed by the Shanghai Futures Exchange in 1999 and the Shanghai Diamond Exchange in 2000.

In April 2015, Lujiazui became part of the expanded Shanghai Free Trade Zone, solidifying its role as a testing ground for financial reforms.

Lujiazui today hosts about 8,000 financial institutions, with more than 300,000 financial professionals working in the area.