Pie in the sky
Beijing city leaders last week declared their ambition to turn the city into China's third financial centre. In a grand ceremony at the China World Hotel, officials and local banking executives gathered for the announcement of the formation of the Beijing Financial Advisory Group.
Made up of top executives from a dozen multinational banks and domestic think-tanks, the group's task is find ways the city can achieve its ambitions. Officials boasted how the city's Chaoyang Central Business District already had 29 Grade-A office and luxury residential projects, and how it was already well on its way to becoming the Manhattan of Asia.
Such outlandish declarations illustrate just how naive Chinese officials and executives remain. They have little idea of what it truly takes to be international and assume that just by throwing up a bunch of glass towers, they can achieve regional financial hub status. 'Hong Kong is past its prime,' one Beijing securities executive said recently. 'We in Beijing can overtake Hong Kong very soon.' Shanghai officials said the same seven years ago and despite hundreds of new glass towers in Pudong and Puxi, the city is far from being a regional financial centre.
Martin Fish, head of Standard Chartered Bank in China, gave a polite speech at the ceremony, praising the city's efforts. But he also warned that Beijing still had a long ways to go. Although China was well on its way to becoming the world's second largest economy by 2020, its banking system still had a long way to go to reform itself, Mr Fish said. Capital controls made it virtually impossible for China to be an international finance centre - let alone Beijing, he added. Although he did not mention it, clearly the fact that Beijing lacks a stock exchange is a major barrier. City officials apparently did not have the stomach for his views. Some left before he had even finished speaking.
Clearly, Beijing has made great strides towards becoming a modern city. But instead of being arrogant, proud, or setting outlandish goals, city officials should just stick to building and urban planning. If they do a good job, the financial markets will grow and eventually decide whether the political capital will also be the financial capital.
While China aspires to become a market economy, all too often its officials get in the way. They assume planning can create markets. They must learn that only economic forces can create markets, not government edicts.
