China and Hong Kong: Can Shanghai be a new international financial center?

On 25 March 2009, Xinhua News reported China’s State Council has endorsed a statement to urge Shanghai to be developed into an international financial center by 2020 in order to keep up with “China’s economic influence and the Chinese yuan’s international status”.

The idea generates discussion in the Beiyouren Forum ( on which city, among Beijing, Shanghai or Hong Kong will become China’s international hub. A mainland blogger, luoluokaikai, forwarded a post which states that Shanghai has a great potential to develop China’s financial services,


From external condition, Citigroup, HSBC, Standard Charted, Banque de l'Indochine, ABN. AMRO etc more than 19 foreign-funded financial corporations have set up their primary reporting banks in Shanghai. When China becomes one of the major capital export countries in the world, Shanghai will naturally become the global financial hub. It is a good sign that the current foreign outlook on Shanghai is favourable. [….] Hong Kong is not competitive as the Shanghai’s economic power and its financial region. These are the greatest advantages of Shanghai.

However, a Hong Kong blogger, lu miguan argues that it is hard for Shanghai to replace Hong Kong status,


Shanghai wants to be the financial hub by 2020, things are unpredictable, it is still hard to say whether it can be really “international”, according to the existing political environment, perhaps it only can be the Northern Asian or the China’s financial center. Because there are two core problems unsolved and they are system and freedom. […] For example, Youtube cannot land in the mainland China because it steps upon the “political” land mill of the communist government. If there is one globally recognized website cannot be free for visiting, can it be an international city? A metropolis? There is no freedom in accessing information, how are those foreign investors willing to start their business in this place?

Another Hong Kong blogger, Eyrnnyes also shares similar views,


Shanghai, to be the “real” international financial center, the success is not based on Chinese people's will nor the support from the central government. It is based on the fact that whether RMB can be exchanged freely! When the foreign capital cannot be freely exchanged to local currency or US dollar and export from China, Shanghai cannot be the real international financial hub! And it cannot replace Hong Kong! Same as the comment from Li Shimin, in the stock market of Shanghai, except for the common bear market and bull market, there is one called “policy market” (in the past call “Zhu market” because of the former Premier Zhu Rongji). So Shanghai cannot replace Hong Kong as the Asian financial center!

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