| International Financial Center£ºAn Unavoidable Dispute Beijing£ºNo longer Hesitating |
| 1/15/2004 14:29:13 |
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¡°It is the last thing we expected that a report could give rise to such a big repercussion.¡± said Dr. Wang Li at the conference room of Beijing Te Hua Research Institute of Finance and Economy on 27 October; although he intended to be low profile, he eventually had to open his ¡°tight-lipped mouth¡± under the repeated requests by journalists.
¡¡¡¡The ¡°report¡± he mentioned above refers to the ¡°Report on the Research of Strategies for Finance Development of the Capital¡± which had taken more than half a year to complete. In reality, it is not the repercussion of the report that exceeds their expectation. Instead, the conclusion of their research was beyond the expectation of the outside world: Beijing not only ought to become the International Financial center of China, but also has the full power to do so.
¡¡¡¡Although such conclusion at their research seems to be the future fact needless to be proved, it has been the first report reflecting the real voice of Beijing.
¡¡¡¡¡°If wanting to become an international financial center, it should first be the financial center of China. Since Beijing is the indisputable national financial center, it is natural that Beijing shall be entitled to the responsibility for drawing up the development strategies for international finance.¡± said Dr. Wang Li, who did not show any surprise at this point of view, as if this is what it should be.
¡¡¡¡Probably the saying ¡°big sound makes less tones¡± is right. It was never heard before that Beijing would build an international financial center. ¡°It is unnecessary to argue over something indisputable.¡± Because this is a matter of indisputability, Beijing has never thought that it needs to talk about, but people not in the know misunderstand it. They wonder, ¡°What is the basis of Beijing for building an international financial center?¡±
¡¡¡¡In fact, the trend of ¡°the Three North Economic Center¡±(Northwest, Central North and Northeast) formed in Beijing, is gradually obvious. According to statistics in 2002, Beijing exceeded Shanghai in the following two aspects which are close to the level of metropolitans in developed countries: one is the tertiary industry, accounting for 61% of the GDP in Beijing, and the other, the product value of the financial industry reaching 48.5 billion Yuan, occupying 15.5% of the GDP, and ranking on the top in China. It is undoubted that the financial industry is playing a more important role in holding the balance of Beijing¡¯s economy.
¡¡¡¡Walking out of the Ping An Plaza where Wang Li¡¯s office is located and looking all round, you will find that the Beijing Financial Street, known as the headquarter of the national financial industry, the management center and the cradle of policies, present you with a tremendous momentum that looks ¡°horridly majestic¡±. Scattered over around the street are 530 famous enterprises and domestic financial institutions, including the head office of the People¡¯s Bank of China, China Banking Regulatory Committee, China Securities Regulatory Committee, the head offices of Industrial and Commerce Bank of China, the Construction Bank of China and the People¡¯s Insurance Company of China. The asset of enterprise management in this area has reached to 1,300 billion Yuan in RMB, controlling 90% of the credit fund and 65% of the premium capital in China. In the meantime, more than 80% of the business head offices of the financial institutions and research and development centers are gathered in Beijing. ¡°In fact, Beijing has already become the national centers of financial commander and management, information and development, fund control and liquidation and bond issuing and transactions, namely, the rightful financial center of China. This is the reality even ¡°the people from outside of Beijing¡± have to admit.
¡¡¡¡80% of the foreign funded banks in Beijing have set their offices in CBD (the Central Business District located in Chaoyang District), which echoes with the financial street from a distance. Up to now, the resident domestic and foreign institutions in Beijing include more than 150 registered foreign funded banks, insurance and securities houses and 200 service agents including local and foreign law firms, accountant firms and investment consultation companies, all which have preliminarily formed an industrial structure in which the financial industry is regarded as the dragon head, and the industries such as finance, insurance, securities, consultation agents and IT telecom play a leading role. In addition, of the 119 research and development organizations established in China by 82 transnational corporations of the world, nearly half of them are in Beijing, while 293 of world top 500 enterprises have set their regional organizations or headquarters in Beijing. Plus the countless foreign organizations registered in China and the residential villages gradually formed by the gathering of foreigners such as Japanese, South Korean, Beijing is now enjoying the atmosphere of international metropolitan, which brings a quite clear situation that Beijing is an ¡°international financial center¡±.
¡¡¡¡However, being lack of the clear and definite nomination, the relevant preferential policies for the financial industry in Beijing are obviously not in conformity with the environment and economic development. In comparison with other cities such as Shanghai, Beijing is far behind in this regard. As a result, quite a few of financial institutions have moved out. Of the earliest 10 national fund companies, there is only one left although 8 of them once chose to settle in Beijing. In 2001, 4 big fund management companies even fled together from Beijing. ¡°In financial environment, Beijing is 10 years backward than Shanghai.¡± sighed Wang Gongwei, the Board Director of the Holding Company Ltd. of Financial Street.
¡¡¡¡The research conducted by relevant experts reveals that the prosperity and decline of Beijing being an international financial center in history is directly related with the prosperity and decline of national power at the time. In fact, Beijing once played a role of ¡°international financial center¡± for several hundred years in history. Starting from the time when Beijing was chosen to be the capital, it has become the centers of domestic and foreign financial exchange and transactions. In the Ming dynasty, the silver drafts of each large banking house in Beijing had ever been circulated in Southeast Asia.
¡¡¡¡Even in the Qing Dynasty, the prosperity in the years of Emperors Kang Xi and Qian Long had ever made Beijing in the position to overlook other parts of the world. However, the Opium War broken out in 1840 really caused Beijing to withdraw from the economic system of China and the world, as well as walking out of the historical stage of financial exchange center. The policy of allowing free trades in 5 harbors stipulated in the ¡°Nanjing Treaty¡± raised economic position of the areas including Shanghai thanks to the promotion of the pidgin economy and China¡¯s early national capitalism, by which the position of the said areas in China¡¯s economy is established. Since then, Beijing has gradually hidden in the shadow of economic development, getting far away from the atmosphere of economy and finance. Beijing began to walk into the shackles elegantly named a center of ¡°politics and culture¡±.
¡¡¡¡¡°It is the law of nature in economic development for a city rather than a matter of necessary to establish the international financial center or not and able to do it or not. We can only help to find this law. The formation of the international financial center is based on the law of nature. There is no exception in China. Right now, China has joined WTO, and Beijing has gained the host status to hold the Olympic Games 2008. All these opportunities and challenges will force Beijing to make a definite wording on its economic function. It is impossible for us to make a concept without foundation.¡± explained Wang Li.
¡¡¡¡Li Yang, the Director of Research Institute of Finance, the Chinese Academy of Social Science, happened to hold the identical views. ¡°It is no necessary to dispute whether Beijing is necessary to establish the international financial center or not and able to do it. Beijing itself, as the financial center of China, has already provided a very good basis for developing itself to be an international financial center in the future.¡±
¡¡¡¡Dr. Yao Qiugen, the Director of the Research Department, Beijing WTO Issues Center, pointed out, ¡°The proposal and confirmation for this strategy is the inevitable selection fully based on the real situation of Beijing and of its future development.¡± When evaluating the work of Te Hua, the people in the same trade thought, with regards to the development of Beijing financial industry, this strategy can be compared to ¡°bringing a picture of a dragon to life by putting in the pupils of its eyes, or ¡°putting off a veil¡±.
¡¡¡¡But does this strategy cause the repetition of the guideline proposed 10 years ago that Shanghai will be established to be an international financial center? Is it possible to have two financial centers in one country?
¡¡¡¡Shanghai: Coming to a Decision?
¡¡¡¡¡°In the past, Shanghai was a financial center, and a place where currencies could be freely exchanged. It should be carried on in the future,¡± said Deng Xiaoping, the General Designer of China¡¯s reform and opening to the outside world, in 1991 during his inspection in Shanghai, which planted a seed of dream for Shanghai to become an ¡°international financial center¡±. What Deng Xiaoping meant by ¡®past¡¯ refers to the time before the establishment of new China. At that time, Shanghai was not only the largest financial center in the country, but also the financial center in the Far East. According to the statistics of June 1946, the deposit of banks and old-style Chinese private banks in Shanghai represented 43.5% of the whole country.
¡¡¡¡Mr. Xue Muqiao, a famous economist, indicated in 1984 that Shanghai was the financial and trade center of the Asian Pacific region in the 1930s. However, it loses the two signboard nowadays, a big error in tactics indeed. In 1994, the Shanghai Municipal Government proposed to form a financial street in Waitan, officially confirmed to be an international financial center. In the past 10 years, many preferential policies made by the State for the financial development have been priorities to Shanghai.
¡¡¡¡Since the 14th CPC National Congress decided to build Shanghai an international financial center by 2010, Shanghai has already become the biggest domestic markets of lending trade, foreign exchange, note discount, securities and insurance in the same, a place where is gathered with most of the domestic foreign-funded financial institutions, and its advantages of financial talents and technology (including information techniques) have made it take the lead in the country. Meanwhile, the various types of markets in Shanghai, such as housing mortgage, commodity futures, silver (even gold) transaction, etc., have already formed the largest domestic transaction center in scale. Hence, the frame of Shanghai as a domestic financial center has taken shape.
¡¡¡¡An indisputable fact is that Beijing, as a financial center, has its advantage in financial policy decision-making, but it lacks of a financial market. In the contrary, Shanghai¡¯s advantage is its perfect financial market including trading agents of securities, commodity of futures, foreign exchange, gold transaction, etc. The note department of the Industrial and Commercial Bank, the data and information department of the Bank of China, the credit card departments of the Construction Bank and the Hua Xia Bank have already moved to Shanghai, while a rumor goes that the credit departments of other 3 state-owned commercial banks are intending to move to Shanghai one after another. In addition, in the final agreement for China joining the WTO, Shanghai is included in the list of the cities in the first place to be open to foreign financial institutions.
¡¡¡¡For the purpose of accelerating the construction of international financial center, Shanghai Municipal Government has announced a series of preferential policies in succession for tax revenue of financial enterprises and house purchase by financial talents. Provided with high freedom of marketing as well as the loose and comfortable environment, Shanghai has its unique advantages in attracting domestic and foreign-funded financial institutions to move in and opening to the outside world.
¡¡¡¡Standing at the revolving restaurant of the Jinmao Plaza, the highest building in Asia, and looking round, you will find that the buildings and plazas relating to finance are in tight rows. The two banks of the Huangpu River, the Waitan financial street and the Lujiazui financial service district in Pudong make the outline of an ¡°international financial center¡± stand out. According to statistics, up to now, more than 70 foreign-funded banks have moved in Shanghai, of which more than 30 have begun handling the RMB business. Moreover, The policy called ¡°headquarter economy¡± and carried out by Shanghai has also attracted many transnational corporations and international tycoons to gather in Shanghai.
¡¡¡¡Some people in the same trade indicated that Shanghai should be called the ¡°economic capital¡± of China, an indisputable economic center in China. In this case, it shall be taken into granted that Shanghai will be developed into an international financial center. However, in comparison with the strategic goal of developing Shanghai into the international financial center of China, Shanghai is still in the period of opening the door of concept.
¡¡¡¡Mr. Chen Liangyu, the Secretary of Shanghai Municipal CPC Committee said when taking the office of Shanghai mayor that, on the road of establishing an international financial center, Shanghai shall firstly quicken its pace of setting up its good faith; secondly, use high-tech to support its financial industry and promote the financial informationalization; thirdly, fully complete the system of financial market, try to set up offshore financial markets and accelerate the establishment of Sino-foreign joint ventures of currency economy; and finally, assist to strengthen the supervision and management of financial organizations so as to ensure a financial security area in Shanghai. This shows that it is still a long way to go for Shanghai to become a real international financial center.
¡¡¡¡In any cases, however, depending on the abundant capital industrial advantages of Jiangsu and Zhejiang provinces, Shanghai has already become the regional financial center in East China, especially in the economic zone of the Yangtze River delta area.
¡¡¡¡Comparing to the development of international financial center in Beijing ¡°is by no means either to negate Shanghai¡¯s objective of becoming an international financial center or to compete against Shanghai for resources and projects. In the aspect of developing an international financial center, Beijing and Shanghai are complementary to each other and their emphasis will be different from each other.¡± Mr. Wang Li distinguished the differences as the following, ¡°one country can have more than one international financial centers, as such centers will be different at levels¡±, and according to China¡¯s reality, ¡°it has the needs to establish more than two international financial centers¡±.
¡¡¡¡In this way, Shenzen is known as the front of China¡¯s reform and ¡°an economic laboratory¡± and was ever dreaming of becoming an international financial center, is it possible for her to be another international financial center in China?
¡¡¡¡Shenzhen: a Painful Topic
¡¡¡¡Although Wang Li thought that they had only made a research report, it still drew the attention of Shanghai and Shenzhen governments. When journalists gathered news from Wang Li, a person who claimed to be from Shenzhen¡¯s Beijing Representative Office called to borrow this report.
¡¡¡¡With regards to the competition for being an ¡°international financial center¡±, Beijing is ¡°confident for its success¡± and takes actions vigorously while Shanghai makes a posture of ¡°No one except me can do it¡±. Does that mean that Shenzhen, being positioned on the margin of financial industry, can only wait and see? In reality, Shenzhen neither look on with a cold eye nor ¡°defend¡± or ¡±offend¡±. Its situation is quite different from that of Beijing and Shanghai.
¡¡¡¡First, the financial industry of Shenzhen does not have enough strength to join such a ¡°competition¡± due to the declining of financial position in the national strategic structure.
¡¡¡¡Beijing is the center of financial decision-making, management and control in China. Since the country proposed to build Shanghai an international financial center, the frame of Shanghai becoming the domestic financial center has taken shape. How about Shenzhen? Since 1998, the status of the People¡¯s Bank in Shenzhen has been lowered, then the big board market suspended the IPO (short for the initial public offering), and the opening of GEM (short for Growth Enterprise Market) founder¡¯s board has been postponed again and again. Furthermore, the futures market, occupying in a leading position for a time, has been withdrawn and merged, the trading agents of foreign exchange and gold transaction have started the practice in order of priority and Shenzhen has been badly defeated in the competition with Shanghai. Second, Shenszhen¡¯s finance is facing to a competitive structure with multi-natures. Its situation is more complicated than that in Beijing and Shanghai. That is because Shenzhen also is in a competition with Guangzhou and Hong Kong in the delta of Zhujiang River.
¡¡¡¡If it is difficult for Shenzhen to get involved in the competition of being an ¡°international financial center¡± with Beijing and Shanghai, it can¡¯t help being in the competition with Guangzhou. Before the 1990s, Guangzhou, known as the political, economic and cultural center, had ever been an indisputable financial center in South China. In early and middle period of the 1990s, all the medium- and small-sized cities in the delta of the Zhujiang River such as Dongguan, Shunde, etc. have developed rapidly in accordance with the flexible system then. Comparing with these cities, however, Guangzhou¡¯s development is at a slow speed. This caused the decline of its cohesive force. What¡¯s more, Shenzhen, the economical special zone, has the advantages in the aspect of preferential policies and is adjacent to Hong Kong. Since its economic power went up rapidly, its position has risen abruptly. After the establishment of Shenzhen Securities Trading Agent, and supported by the securities trading market, Shenzhen once became a place of financial strategic importance, which brought out a question of whether Shenzhen can replace Guangzhou. However, in recent years, there are great changes in the Zhujiang River delta. Guangzhou¡¯s economy developed rapidly, and its ability of economic radiation is strengthened, while Shenzhen was backward due to the reason of the big board stopping the issuance of new stocks and the GEM waiting for its opening. Therefore, the topic about the financial center in South China was once again brought on the table.
¡¡¡¡However, the problem for Shenzhen is not the competitions but the popularly existing ¡°prejudice¡± of misunderstandings and even despising attitude towards it.
¡¡¡¡First, people cannot use the correct attitude towards Shenzhen¡¯s financial history and position. When commenting on the financial achievements of Shenzhen, most of people thought that it should be owing to the special policies of the State. But they¡¯ve never thought that what had been tried in Shenzhen could be hardly succeeded in other regions. For example, the futures industry was not successful in Shanghai at the beginning, but it succeeded in Shenzhen later. Finally, it was withdrawn and merged in Shanghai. Such examples can be found not only in the financial industry but also in other industries. It is thus clear that Shenzhen and Shanghai are respectively a man of finding the road and a man of road explorer in the history of China¡¯s reform in its economic system. After Shenzhen successfully explored a new road, then Shanghai would be responsible for constructing it so as to implement the strategic transfer and promote the development of nationwide economy.
¡¡¡¡Second, people did not understand and even conflict with Shenzhen¡¯s idea of winning to have a normally required financial environment. Shenzhen was regarded to slaver ¡°international financial center¡± when it attempted to resume the issuance of new stocks; the 18-article financial policy announced by Shenzhen was also regarded as the ¡°letter of challenge¡± to Shanghai as people thought that Shenzhen took Shanghai as its enemy. All these examples have reflected the one-side view of the people for Shenzhen¡¯s financial industry. With its rapid development in the past 20 years, Shenzhen¡¯s financial industry has already become the main industry of the city, and Shenzhen¡¯s comprehensive power and competition capacity was ranked at the top in China. The main purpose of Shenzhen striving for the improvement of its financial environment is to keep the sustainable and steady development of Shenzhen¡¯s economy.
¡¡¡¡Finally, people have misunderstandings on the position of Shenzhen¡¯s financial industry. When China deepened the reform of financial system and tries to be in conformity with the international practice, Shenzhen attempted to act first and try first, and undertake the task of experiments, but it was regarded to go on enjoying the special preferential policies. Nonetheless, the people can hardly imagine that Shenzhen should be in conformity with Hong Kong first before it does the same with the international practice. Closely adjacent to Hong Kong and in possession of highly developed financial industry, if Shenzhen is difficult to be in conformity with the international practice, how about other areas in China? Based on this point, Shenzhen is facing the problem of how to be in conformity with an international financial center rather than to compete with Shanghai and Beijing on the matter of becoming an ¡°international financial center¡±. Recently, Shenzhen Municipal Government clearly indicated that the development objective of Shenzhen¡¯s finance is to strengthen the position of Shenzhen¡¯s regional financial center. On this basis, the communication and cooperation between the domestic and overseas financial industries will be strengthened, the long-term and stable cooperative mechanism will be set up between Shenzhen and Hong Kong, and the close tie between Shenzhen¡¯s and Hong Kong¡¯s financial industries will be further strengthened. Meanwhile, CEPA will be carried out early next year. Shenzhen¡¯s trading agents are ready to resume IPO. It shows that the external environment of Shenzhen¡¯s finance has been greatly improved.
¡¡¡¡Being adjacent to Shenzhen, Hong Kong has encountered the impact from Beijing and Shanghai, who are competing with each other for becoming the international financial center of China, in the background of economic depression. Will the position of Hong Kong¡¯s international financial center be shacked?
¡¡¡¡Hong Kong: Pains of Tearing?
¡¡¡¡The pace of Shanghai and Beijing establishing international financial centers does not seem to make Hong Kong feel embarrassed. That is because Hong Kong only fixed its position in serving the financial center of the Asia Pacific Region and the one in Southeast Asia in particular.
¡¡¡¡On 24 October, the opening of ¡°Beijing-Hong Kong Financial Cooperation Conference¡± has proved this point once more. At the conference held in the Fukai Plaza on the Beijing Financial Street, more than 200 people of high-ranking and experts expressed their confidence in promotion of Beijing-Hong Kong financial cooperation, and they offered advices and made suggestions for the construction of the financial center without avoiding any taboo, and believed that it would be beneficial to both Hong Kong and Beijing.
¡¡¡¡Li Yang pointed out that each financial center, without exclusiveness, has its own fixed position, which cannot be replaced in a short period in accordance with its advantages. Li Ruogu, the Deputy President of the People¡¯s Bank of China, also said that Hong Kong, as an international financial center, has advantages in the aspects of financial infrastructure, business management standard and fund power, which are just the difficulties that the hinterland is in shortage and urgently needs to be solved.
¡¡¡¡In reality, Hong Kong, as the international financial center, has considerably advantages in many aspects such as various laws and regulations in relation to software, the management frame, etc. The several financial centers in the mainland cannot compete with Hong Kong in a quite long period to come. Moreover, Hong Kong used to be the interface that China got in touch with the world in the past and shall go on playing the same role in the future. Hong Kong will remain the same advantages in this regard.
¡¡¡¡Qu Hongbin, the Chief Economist of the Hong Kong Bank Co. Ltd in China, said, up to now, Beijing, Shanghai and Shenzhen have formed a fairly economic scale. Each city has its own advantages. The future structure of China¡¯s financial center will be developed in pace with each city¡¯s comparative advantages.
¡¡¡¡Liang Dingbang, the Senior Lawyer of Hong Kong, indicated that the construction of Hong Kong¡¯s financial center could provide samples and experiences for the cities of the mainland. The most important of all is that Hong Kong can provide practical experiences for the mainland in the aspect of being in conformity with the international financial market. After signing CEPA, Hong Kong can support the inland banks to move the international fund to Hong Kong and ensure that the inland can make full use of the Hong Kong financial agents in the course of the mainland¡¯s financial reform, restructure and development. With a perfect market system and the characteristics of Chinese and western cultures, Hong Kong can bring its experiences and methods to the inland and assist the inland to complete the track change of the structure. In this way, the position of the international financial center will be gradually strengthened.
In this way, Hong Kong gets a better opportunity rather than is lashed by Beijing, Shanghai and Shenzhen in the challenge of constructing a ¡°financial center¡±, for it is believed that crisis is at all times together with danger and opportunity.
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