China should have more than one financial center, says economist

A noted Chinese economist said Thursday that China should have eight financial centers rather than just one in Shanghai.

The eight centers could form a national financial network and work together to create better "financial services" countrywide, said Lu Hongjun, chairman of the International Financial Centers Association and also president of the Shanghai Institute of International Finance.

According to Lu's design, the eight centers will be located in China's eight major economic regions.

Beijing would be the state financial policy and management center and Shanghai would remain as the international financial center, according to the design. Guangzhou and Shenzhen combined would be the financial center of the south China's Pearl River Delta; Shenyang and Dalian would become the financial center of the northeast China.

Xi'an has the potential to be financial center for the northwest and Chongqing for the southwestern. Zhengzhou could be developed into the central region's financial center, said Lu.

In addition, Hong Kong should remain the international financial center of the Asia-Pacific area, said Lu.

Chinese Premier Wen Jiabao also stressed the importance of "coordinate development" at the on-going Third Session of the 10th National People's Congress (NPC), saying that each part of China should have its own development strategy and work together for coordinate development of different regions.

Currently, there are more than 40 financial cities worldwide. The United States, Japan and Europe all have their own established financial centers.

Lu said the United States has not only an international financial center, New York, but also a financial policy center, Washington DC, and several other regional financial centers, such as Chicago, Boston, Houston, Los Angeles and San Francisco. Together these cities form a stable and effective financial system in the United States.

China's financial sector has achieved rapid development after a two-decade-long reform and will likely become an important part of the global financial market, said Lu.

He said that because China will completely open its financial sector to overseas investors in 2006, it is vital for the country to establish a national financial centers network.