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Edited by Ben Derudder, Michael Hoyler, Peter J. Taylor and Frank Witlox
Chapter 39: Shanghai, Beijing and Hong Kong Within a Financial Centre Network
Karen P.Y. Lai INTRODUCTION Since the early 1990s, Shanghai has been earmarked by the central government as the new flagship city to connect China to an increasingly integrated world economy, with particular emphasis on finance and trade sectors (Hertz, 1998; Wu, 2000; Yatsko, 2001; Yusuf and Wu, 2002; Green, 2004). This has raised increasing concern that it may overtake Hong Kong as the pre-eminent financial centre within China, if not the wider Asian region (Wild, 1997; Ng, 2000; Ogden, 2000; Economist, 2002; Wong, 2007). In addition, the development of Jinrong Jie (Finance Street) in Beijing with its agglomeration of regulatory institutions and headquarters of state-owned banks has thrown into question Shanghai’s own trajectory to become the leading international financial centre (IFC) for China (Hu, 2008; Caijing, 2009). Based on these views, Shanghai’s future as China’s IFC seems far from assured and Hong Kong’s position appears threatened by the development of IFC capacities on the mainland. However, the reality is that Hong Kong continues to be the dominant IFC in East Asia and a global leader in international banking and finance (Meyer, 2002, 2009). This chapter focuses on the distinctive development of Shanghai as a commercial centre, Beijing as a political centre and Hong Kong as an offshore financial centre by analysing the decision making of large foreign banks and the different functional roles of their banking operations in each city, with all three financial centres performing complementary roles within the regional banking strategies of foreign banks. It is this network...
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