Differentiated Markets: Shanghai, Beijing and Hong Kong in China’s Financial Centre Network

This paper examines the roles of Shanghai, Beijing and Hong Kong as financial centres by utilising interview and secondary data to analyse the decision-making of financial and regulatory actors, and the different functional roles of foreign banks in those cities. Their intercity relations demonstrate a complex mix of competition and collaboration that embeds them in evolving networks of interdependence. Empirical findings indicate differentiated markets leading to the distinctive development of Shanghai as a commercial centre, Beijing as a political centre and Hong Kong as an offshore financial centre, with all three financial centres performing distinctive and complementary roles within the regional banking strategies of foreign banks. The analysis first explains Hong Kong’s continued dominance in the region and, secondly, reveals insights into changing intercity relationships between these prominent Chinese cities that contribute to their distinctive development as financial centres.