A race is brewing between the port cities of Greater Kaohsiung and Shanghai for liberalization, as a plan to prepare Shanghai for international metal trading has come on the heels of news that Greater Kaohsiung will serve as a delivery point for a leading London exchange.
In mid-June, the London Metal Exchange (LME) announced that it had approved Greater Kaohsiung as its ninth delivery location in Asia, making it the first port on either side of the Taiwan Strait to be certified by the LME as a delivery point.
Greater Kaohsiung, which houses a free-trade zone, will begin handling various metals for futures trading by the end of November, outpacing a similar development in Shanghai, where a pilot free-trade zone is sited, Taiwan International Ports Corp (臺灣港務公司) said.
China’s Ministry of Commerce suggested last month the development of the Shanghai free-trade zone into a delivery point for overseas commodity futures dealers, prompting speculation in the Chinese media about the possible role the London exchange would play in the blueprint.
Charles Li (李小加), chief executive of Hong Kong Exchanges and Clearing, which owns the LME, has said it would be “most ideal” for the London exchange to have certified warehouses in China.
The LME does not own or operate warehouses, but simply authorizes warehouses to store LME-registered metal.
Some are concerned that the development of Shanghai into an LME delivery point could hurt the edge Taiwan enjoys in logistics and warehousing.
However, Yeh Huei-te (葉惠德), head of an association of Taiwanese businessmen operating in Shanghai, stressed the advantages Taiwan enjoys — a more mature market, sound laws and regulations and administrative efficiency.
Yeh said that Taiwan’s own efforts will be crucial in the competition with China.