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Shanghai’s global hub ambitions take a hit as high-tech rival Shenzhen’s new-found autonomy threatens to put it in the shadows
- Shanghai’s efforts to build itself into an international financial hub suffered a blow when Beijing granted greater autonomy to Shenzhen, according to analysts
- The government recently unveiled plans to turn Shenzhen into a ‘core engine’ of reform that it hopes will power growth and innovation
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Shanghai’s efforts to build itself into an international financial hub suffered a blow when Beijing granted greater autonomy to its high-tech rival, Shenzhen, aimed at boosting its role as a model for the country’s development, according to analysts.
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With the southern city neighbouring Hong Kong now able make its own laws on market liberalisations, Shanghai, formerly a front runner in making economic and financial reforms, finds itself under mounting pressure to maintain its status as mainland China’s primary economic locomotive.
“Shenzhen would race ahead of Shanghai in terms of opening up [its economy to foreign investors] if it were to effectively enforce the favourable policies granted by the central government,” said Wang Feng, chairman of Shanghai-based financial services company Ye Lang Capital. “After all, Shenzhen is now able to further open up its financial markets through incentives which were [previously] given to Shanghai exclusively.”
On October 18, the National Development and Reform Commission (NDRC) published a list of 40 specific areas in which Shenzhen could make reforms or undertake new ventures in the coming years.
Among them, Shenzhen, a former fishing village that became the first of China’s 220 special economic zones four decades ago, is allowed to launch stock index futures, issue Chinese depositary receipts (CDR) shares and relax capital controls.
The incentives could threaten Shanghai, as the mainland’s financial and commercial capital looks to join a list of global elite cities such as New York and London by attracting foreign capital and talent.
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In 2009, the State Council, China’s cabinet, set a goal to establish Shanghai as a global financial centre by 2020 in tandem with Beijing’s ambitions of making the yuan an international currency.
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