Shanghai and Hong Kong as Service Hubs (out of stock)

Shanghai and Hong Kong as Service Hubs While Guangdong was the pioneer of China's reform in the 1980s, the focus of national development shifted to Shanghai in the 1990s. As Shanghai's mission is to be a service hub, this paper compares the role of Shanghai and Hong Kong in shipping, international trade and finance. Shipping: With reform era decentralization, provinces around Shanghai built their own ports, and Shanghai's share of China's cargo handled at its port fell drastically. This did not imply the demise of Shanghai's port because Shanghai's cargo shifted away from river cargo to ocean-going container cargo which had higher value-added. Since the modernization of Shanghai's container facilities in 1993 (largely attributable to the investment of Hutchison Whampoa Limited, Hong Kong's foremost container operator), Shanghai has been transformed from a feeder port of Hong Kong to a container port in its own right. However, the lack of a deep-water port in Shanghai is a long-term problem. Even with expensive dredging, Shanghai will not be able to handle modern third- and fourth-generation ships. International Trade: The shipment of non-Shanghainese products via Shanghai includes re-exports (products handled by Shanghainese trading companies) and transshipment (products handled by non-Shanghainese companies). The share of Shanghai's transshipment in national exports has risen due to Shanghai's success in containerization. However, the share of Shanghai's re-exports in national exports has fallen sharply in contrast to the rising share of Hong Kong's. Provincial rivalry and the inefficiency of Shanghai's state-owned trading companies have hampered the growth of Shanghai's re-exports. Though Shanghai has some success as a shipping hub, its performance as a trading hub is quite dismal. Financial Centre: Shanghai has developed rapidly as a domestic financial centre. However, the specialized banks of China have refused to move their headquarters from Beijing to Shanghai, as the decisions to allocate loans are still made administratively in Beijing. Shanghai's potential as a domestic financial centre is not yet fully realized. Unlike Hong Kong, Shanghai is not yet an international financial centre. The gaps between Hong Kong and Shanghai in international financial activities are very large largely because the renminbi is not convertible. Despite its rapid development as a service hub, Shanghai still has a long way to go. The growth of high-end services (e.g., financial services, telecommunications and the media and information industry) requires an efficient regulatory regime and a clean and transparent administration. Shanghai needs not only economic reforms, but also reform of its bureaucracy and government.