Shanghai’s quest to be global financial centre gains impetus from Hong Kong troubles but big obstacles remain
- Hong Kong’s role as an offshore money centre for China may decline if Beijing further tightens its grip on the city
- China has long wanted Shanghai to become the country’s premier finance hub, but capital controls and its legal system remain obstacles
China’s decades-old quest to make Shanghai an international financial hub has gained a bit of momentum as Washington mulls tightening China’s access to US capital markets and the future of Hong Kong is clouded by Beijing’s imposition of a national security law.
However, a heavily restricted capital account and the absence of a legal system favoured by international business are still huge obstacles for the mainland city to compete with the likes of New York or London, even though Hong Kong’s role as a global money hub could decline, analysts said.
Investors in the city can trade equities, bonds, futures, foreign exchange, gold, insurance and trust. However, even though the market size in Shanghai may be big, trading is limited by capital account controls, with only a few official openings such as the Stock Connect with Hong Kong.
The relative rise of Shanghai is not because it did so well, but the downfall of Hong Kong
“The relative rise of Shanghai is not because it did so well, but the downfall of Hong Kong,” said Chen Zhiwu, director of the Asia Global Institute at the University of Hong Kong.
