as an International Financial Centre
09815346D YUE Pujue (Betty)
The day that Shanghai’s financial system is protected behind the thick walls of a closed account has gone away. When China’s State Council revealed the plan to develop Shanghai into a multi-functional international financial centre by 2020 in the late March 2009, Shanghai rapidly responded to the call by increasing its financial industry output value as a share of Shanghai’s GDP from 10% in 2008 to 12% in 2009. Therefore, whether Hong Kong, as an international financial centre, is able to survive under Shanghai’s further opening and reform financial system arouses hot debate. This paper briefly recounts Hong Kong’s recent development, introduces the challenges from Shanghai, compares Hong Kong’s competitiveness with Shanghai’s, gives insights of Hong Kong’s near future, and at last leads to a conclusion.
1. Recent development of Hong Kong’s financial sector
According to the Global Financial Centres Index 2011, Hong Kong ranked third, exceeding Singapore and only falling behind London and New York. This new achievement not only relies on the recent development of Hong Kong's capital market and securitization business, but also relies on the reforms in its financial system. Over the past 14 years, the development of Hong Kong basically followed the process of gradual relaxation of financial regulations and enhancement of supervision, which led to a more free, open and resilient market. More importantly, these ‘relaxation and enhancement’ reforms further improved financial sector’s capital and operational efficiency, largely because the development of capital markets broadened the corporate financing channels, the abolition of interest rate agreement enabled banks to price their loans and deposits more competitively, benefiting both corporate and individual borrowers; and because the lowering of market entry threshold and... [continues]
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