China is putting in effort to elevate Shanghai into a global financial center. Hong Kong on the other hand, is already a global financial center with significant influence.

Then, is China able to maintain these two global financial centers? The answer depends then on how one defines an international financial center. Anbound's Chief Researcher, Chan Kung concisely identifies and focuses on the core of problems, has a very simple judging criteria for the international financial center. Taking the global competitiveness of a currency as the criteria, whoever has the most competitive currency in the world is the true financial center. A large financial city with a currency like this is equal to that of Mecca, figuratively speaking. Compared to such a financial city, other "financial cities" in the world are unable to measure up and truly affect the global financial market.

According to this standard, looking from the viewpoint of international politics and a competitive currency, our diverse world has only one systemically important financial center and that is the United States with its global financial city of New York. There is no country or city in the world that can compare to New York. We have also determined that for a relatively long period in the immediate future, New York will continue to be a systemically important international financial center. From the perspective of financial transactions, there will be a few financial centers in the world, such as London, Paris, Frankfurt and Tokyo. This is decided by the model of global financial activity. From the perspective of the markets, there could be even more financial centers. A location with a significantly huge market model could present massive financial transactions as well, and that might necessitate the existence of an important financial city, such as Shanghai.

Shanghai is an international financial center that is "imposed" within Mainland China. Presently, Shanghai has fundamentally established a national financial market system that includes stocks, bonds, currencies, forex, commodity futures, OTC financial derivatives, gold as well as property rights trading markets, among others. However, if we look from the perspective of an international financial center, Shanghai still has a huge gap to cover if compared to the likes of New York and London. In 2018, the Globalization and World-class City Research Group and Network (GaWC) published a world-class city ranking. The ranking shows that 55 cities in the world have entered the Alpha level, the world's tier-one cities. Amongst Alpha level cities, there are only two cities, namely London and New York, that have attained the Alpha++ level city certification. There are 8 cities in Alpha+, namely Hong Kong, Beijing, Singapore, Shanghai, Sydney, Paris, Dubai and Tokyo. According to the Fed's latest forecast, New York's total GDP in 2018 reached US$1.03 billion, while per capita GDP exceeded US$120,000 (approximately RMB 792,000). Tokyo's GDP is forecasted at US$102.20 billion, while per capita GDP is US$78,000 (approximately RMB 510,000). In comparison, Shanghai's GDP in 2018 is about US$493.85 billion (RMB 3.2679.87 billion). And calculating based on permanent residency figures, Shanghai's per capita GDP in 2018 is only US$ 20,000 (RMB 135,000). That translates to only one-sixth of New York's per capita GDP and about a quarter of Tokyo's. Using Shanghai's economic scale in 2018 as a base of measure, if Shanghai's economy grows at a compound annual growth rate of 5%, Shanghai will only be able to attain New York's 2018 levels by the year 2034.

In addition to that, for an international financial center, Shanghai is not international enough. In 2017, Shanghai's financial market transactions totaled approximately RMB 1,430 trillion. It has 1,537 licensed financial institutions, making it an important converging point for Chinese and foreign financial institutions. However, due to the current closure of China's capital market, the openness of Shanghai is relatively lower than that of other international financial centers. In end of 2017, a total of 5,235 companies were listed on the New York Stock Exchange and Nasdaq, of which 17% were foreign company listings. 24% of listed companies on the London Stock Exchange were foreign companies, accounting for 493 companies. There were no foreign companies listed on the Shanghai exchange. In terms of transaction volume, all transactions involving foreign institutions which includes qualified foreign institutional investors (QFII), RMB qualified foreign institutional investors (RQFII) and Shanghai Stock Connect accounted for less than 2% of all transactions. The proportion of overseas institutional transactions in the United States market is 25%. Shanghai's bond market has even lesser foreign investment, and foreign participation is almost negligible compared to the total. In addition to that, the percentage of foreign institutions operating in Shanghai does not exceed 30%. However, foreign institutions heavily outnumber local institutions in London, Tokyo and New York, among other international financial centers, even going up to as high as 70% of total institutions.

Other than the scale that is shown by the transaction of financial markets shown above, the thing that should be emphasized is that whether Shanghai will be able to make a difference in the development of international financial centers in the future depends on the international competitiveness of the Chinese yuan. The competitiveness and influence of currency is a key component of globalization. Similarly, globalization is a support pillar of currency competitiveness and influence. The substantial influence of the U.S. dollar in the world arises from the great influence that U.S. exerts on the world. Once the U.S. adopts isolationism for the long term and removes itself from the world, its influence will be greatly limited. The influence and global competitiveness of the U.S. Dollar will also be greatly reduced, depreciating the standing of the U.S. dollar.

In the present, domestic politics within the United States does have a certain impact on the competitiveness of the U.S. dollar. Wall Street and the Feds hope to continue maintaining the influence of the U.S. dollar and utilize it to continually support globalization. President Donald Trump's "U.S. First" and "Make America Great Again" however lean towards isolationism and anti-globalization. Taking a step back from standpoint of globalization, the Trump administration is not willing to assume more world responsibility. As a result, a fissure between Wall Street's interests and the United States' political interests has appeared. If such cracks deepen and expand in the coming years, the future position of the U.S. dollar will be impaired.

Final analysis conclusion

In the future world, if conflicts and competition intensity and the standing of the U.S Dollar depreciates, America and New York's central position as a financial hub might be affected, even to the extent of degradation. If the world is subject to subversive factors, there is a possibility of returning to the standard of "multiple financial centers". Financial centers that makes up this standard are New York, London, Paris, Frankfurt and Tokyo, to name a few. These financial centers will then replace the status and financial importance of New York in a parallel and balanced way. As for the concept of "currency of the world", a change could happen as well. Around the world, more physical good exchanges will take place utilizing trade and monetary agreements as their base, especially among emerging economies and trade that is related to emerging economies. At the same time, the value of gold will reappear, and the developmental potential of digital currencies is also present.