Hongkongers feel increasingly pressed over Shanghai's blueprint to be an international financial and shipping metropolis.
Shanghai's commitment to develop into the Chinese mainland's financial center is not new. In the early 1990s, the Shanghai municipal government mapped out a long-term development blueprint, making public its plan to become one of the world's main economic, financial and trade centers by 2010. It has laid out a series of ambitious plans to this end and actively pushed for their implementation.
From May 9-10 last year, the Shanghai government, together with the People's Bank of China, the China Banking of Regulatory Commission and the China Insurance Regulatory Commission, co-sponsored a Lujiazui Forum in the country's eastern economic hub, soliciting worldwide opinion on its bid to become an international financial center. The forum was later confirmed as an annual event.
Along with its ambition to be an international financial center, Shanghai has also long committed to becoming an international shipping hub. Under the leadership of the central government and with the support of Zhejiang province, Shanghai started building a deepwater port in neighboring Yangshan in June 2002.
On March 25 this year, the State Council convened an executive meeting to approve in principle Shanghai's plans to develop modern service and manufacturing sectors and to forge itself into one of the world's financial and shipping centers by 2020. Shanghai's plan coincides with the country's larger timetable to build a prosperous society in an all-round way.
At the March 25 meeting, the State Council said Shanghai should develop into an international financial center proportional to China's economic power and the international status of its yuan by 2020. It should also develop into an international shipping hub capable of global shipping resources distribution.
The piece of news, undoubtedly encouraging to Shanghai, has nevertheless stirred up great repercussions within the Hong Kong Special Administrative Region. Hongkongers have long worried that the region's financial and maritime status within the motherland's economic development will be replaced by a flourishing Shanghai.
A large number of Hong Kong residents hold some knowledge about Shanghai's plan to develop into an international financial and shipping center. This is particularly the case within the region's financial, shipping and economic circles. However, the central government's decision still serves as a shock to them.
The State Council resolution, the first development strategy made by the central government, means Shanghai is stepping up the construction of an international financial and shipping center.
Concurring with the State Council announcement, Zhou Xiaochuan, chief of the People's Bank of China, the country's central bank, made remarks about the reform of the international currency and the international financial system. That means the country plans for the rise of the yuan's international status. At this critical juncture, Shanghai's planned emergence as the country's financial and shipping center will make more sense.
By 2020, China is expected to rank third in the world in terms of its economic power, only after the United States and Japan. Also, the yuan is expected to become a convertible currency that will serve as a regional reserve currency in neighboring countries and regions.
The world financial market is now suffering a deep crisis and turbulence. It is widely expected that after the end of the crisis, the development of overflowing financial derivatives will be brought under effective control and the financial industry's function of serving other sectors will be effectively strengthened. All these will help Shanghai, as an emerging international financial center, narrow its distance with New York, London and other global financial centers in terms of offering financial services and investment items. Shanghai's port is expected to rank as the world's No 1 in terms of shipping services, including its container and bulk cargo shipping volumes, before 2020. Also by that time, Shanghai will possess capabilities for global shipping resources distribution.
Facing Shanghai's emergence, relevant industries in Hong Kong have felt great pressure from fierce industrial competition brought by the country's new financial and shipping hub. Shanghai has achieved outstanding progress over the past 30 years since China's adoption of the reform and opening-up policy. Its great achievements and bright future will continue to be inseparable from the motherland's vigorous support.
Hong Kong's status as an international financial and shipping center began to take shape in the 1970s. Its subsequent development and build-up has also been attributed to a large degree to the mainland's reform and opening-up initiative. To maintain and strengthen its status as an international financial and shipping hub, Hong Kong should step up its economic integration with the mainland and improve its administration in the economic and political spheres.
The author is a senior analyst with the China Everbright Group.
(China Daily April 15, 2009)