A worker cleans the promenade on the Bund along the Huangpu River in Shanghai. File photo: VCG

Challenges remain

Shanghai will likely surpass Singapore as the world's fourth-largest financial hub within three years, based on the metrics of a recent ranking of global financial centers that put the city in fifth position, thanks to its strength in the volume of products and deals, as well as further opening-up, a Chinese analyst said on Sunday.Shanghai retained the No.5 position but saw its score move closer to those of global hubs including New York and London, according to the 25th edition of the Global Financial Centres Index (GFCI 25) compiled by the China Development Institute in Shenzhen, South China's Guangdong Province and London-based Z/Yen Partners.The GFCI 25 provides evaluations of future competitiveness and rankings for more than 110 major financial centers has received considerable attention from the global financial community.China announced an action plan in January to transform Shanghai into an international financial center by 2020, with a focus on yuan-denominated products and strong financial resource allocation capability.New York remains in first place in the index with 794 points, followed by London, Hong Kong and Singapore. Shanghai was just ahead of Tokyo with a score of 770 points. In the previous survey in September 2018, Shanghai's ranking was also fifth with a score of 766 points.Xi Junyang, a professor at the Shanghai University of Finance and Economics, said looking at the metrics used in the ranking, Shanghai could replace Singapore within three years."This ranking focuses on volume. Singapore is relatively developed but Shanghai has much growth potential. The city has the vast Chinese domestic market as its source for growth," Xi told the Global Times on Sunday.Shanghai made great progress in 2018 in terms of the volume of deals and the growth in types of financial products, Xi said. Its level of openness also greatly improved.In 2018, Shanghai had financial market turnover of $245.15 trillion, up 15.2 percent year-on-year, according to news site jiemian.com on Friday.Indication of greater openness in recent years in Shanghai included the internationalization of the Shanghai Gold Exchange and the creation of a crude futures exchange. A bond connect plan is also in the works to integrate bond investors with the global market, and the daily quota on the Hong Kong-Shanghai stock link program has been expanded."Improved rankings of Chinese cities such as Shanghai, Shenzhen and Hong Kong reflect the advance of China's financial industry and its trend of greater openness. Their influence is also rising as global economic activity shifts toward Asia," Zhao Xijun, deputy director of the Finance and Securities Research Institute at the Renmin University of China, told the Global Times.When the index was first published in 2007, Shanghai only ranked in 24th position with a score of 576 points. Its gap with the No.1 global hub narrowed by 165 points over the years, the jiemian report said.However, experts said the gap is still huge in reality relative to global leaders. Capital controls, limits on the convertibility of the yuan and restrictions on domestic institutions when it comes to exploring global financial markets and vice versa, are challenges still faced by Shanghai, Xi noted."There has been much progress but there is also much room for improvement," Zhao said. "We must not forget that the reason China develops its financial industry is to let it serve the overall economy.""Globally, there are only two "real" financial centers - one is New York and the other is London. Shanghai has to do more," Zhao said.