(Ecns.cn)-- China only needs five regional financial centers to satisfy the country's financial needs, according to Pan Yingli, a professor at Shanghai Communications University whose focus is on finance and macroeconomics. Those five cities are Beijing, Shanghai, Shenzhen, Chongqing and Xi'an, she said.
Yet much of the recent urban planning by Chinese cities has also included a 'fashionable' tendency to develop themselves into regional financial centers; by the end of July more than 30 cities had set their sights on such a target.
For local governments, developing their financial industries will not only bring them huge revenue, but create jobs and help develop property markets, Pan said, explaining why local governments are in such a rush.
An extreme example is in East China's Zhejiang Province, where three cities have all proposed plans to become regional financial centers, according to the Times Weekly.
Three centers in one province?
Wang Luzhi, a professor at the Business School of Zhejiang Wangli University, did not immediately understand the ramifications of making Ningbo a "regional financial center."
The city in Zhejiang Province had proposed its plan as early as 2006. An intense discussion was had on Ningbo's future as a financial center last year, Wang said, but no further progress was made.
According to Zhejiang Province's 12th Five-Year Plan on finance development, its aim was to develop the three cities of Hangzhou, Ningbo and Wenzhou into financial centers for small and medium sized-enterprises and private investment.
Hangzhou would be developed into the most important financial center south of the Yangtze River Delta and a key sub-center of Shanghai. Ningbo would become a shipping center, bolstered by Shanghai's international shipping position, while Wenzhou would focus on offering professional financial services to private businesses.
The planning seemed reasonable to Wang Wei, president of the Academy of Financial Research at Zhejiang University, who took charge of the formulation. "The province's three financial centers were planned in accordance with various functions," he said, adding that their planning stressed functionality and specialization instead of building one "national" or "large regional" financial center, as laid out by other provinces or cities.
Nevertheless, the planning was suspect to Pan, who argued that the so-called "regional financial centers" only offering services to nearby cities or counties lacked authenticity. "They are two different concepts," Pan said. "According to international standards, regional financial centers should be able to cover at least several provinces."
Nie Riming, a researcher with the Shanghai Institute of Finance & Law, was also not optimistic about Zhejiang's planning. "Once Shanghai becomes a real international and nationwide financial center, nearby cities and provinces – including Zhejiang and Jiangsu – will fall under it. That means it is impossible for those provinces to form financial centers," said Nie.
Nearby cities including Hangzhou, Wenzhou and Ningbo can only play a subsidiary role to Shanghai, such as providing housing and entertainment services, Nie added.
In addition, it is impossible to construct a commodity futures exchange house in Zhejiang Province, as there are already three in Shanghai, Dalian and Zhengzhou, according to experts.
