The emergence, growth and rising status of a global financial center hinges largely on its economic power, that of its country or region and the world economic growth trend.

According to latest statistics from the Global Financial Centres Index, co-produced by London-based think tank Z/Yen and Shenzhen-based China Development Institute, Asian financial centers occupy five positions among the top 10 in the world. Among them, Hong Kong, Shanghai and Beijing are ranked the third, fifth and ninth on the list.

These changes reflect that developing countries are on the rise: As the emerging economies have increased in influence and international status, the global financial strategic center of gravity has shifted to the Asia-Pacific region. In recent years, financial centers from Asia, China in particular, have gradually "squeezed" into the leading position in an established pattern dominated by Europe and the United States.

One reason for that is that after the global financial crisis, while developed economies struggled with long-term recession; emerging economies outstood themselves in world trade and investment and their overall economic strength increased substantially.

Additionally, international financial resources are flocking to emerging economies against the backdrop of Brexit and US trade protectionism. This further increases the status of emerging financial centers. China is no exception.

According to the index, global financial centers are also seeing an increase in diversity. While omnipotent and integrated financial centers such as New York, London, Hong Kong, Singapore, Shanghai, and Tokyo hold leading positions in the global financial center spectrum, many other cities are seeking breakthroughs in niche fields, thereby effectively enhancing their competitiveness.

For instance, Beijing finds itself home to the national headquarters of financial institutions and a supervision center; Shenzhen aims to build itself into an international financial innovation center by opening up the financial industry, the market-based exchange rate reform, and the building of multilevel capital markets; Qingdao in Shandong province is working toward being an internationally-oriented wealth management center.

The index also shows it is the financial technology that is driving the boom in global financial centers. Big data, cloud computing, block chain, artificial intelligence, and the mobile internet are being widely applied in the financial field. With low cost and high efficiency, these technologies have transformed and even subverted traditional finance, risk management, and asset management.

Riding on the trend to develop financial technology and promote financial transformation, China's financial centers such as Shenzhen and Hangzhou have become the hub for global high-tech financial growth. Technology giants such as Tencent and Alibaba are further promoting the development of China's financial technology, and laying a solid foundation for the development of Chinese financial centers.

However, there is a long way to go before China's financial centers can catch up with financial cities in developed markets. So, in order to further consolidate and enhance international competitiveness, China's financial centers should take the following into consideration.

To begin with, it is necessary to carry out overall planning at the national level, considering the differences in urban development, and build an international financial center system with Chinese characteristics.

Second, the urban business environment needs further improvement. If Chinese cities strive to build a world-class financial center, it should optimize the business environment, cut red tape, and enhance the confidence of international investors to take root in China.

Third, China also needs to improve the quality and transparency of financial supervision by learning from established centers such as New York and London.

Last but not the least, financial technology innovation should be encouraged. As China's financial centers such as Shanghai, Beijing, Shenzhen, Hangzhou have consolidated the foundations for financial technology, the next step for them is to keep a close eye on financial innovation and new development, and actively hasten the transformation from traditional finance into new forms.

The author is a research fellow with the Financial Section of Shenzhen-based China Development Institute. 

The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

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