Analysts have long speculated as to which Asian financial centre – Hong Kong , Tokyo, Singapore (and, more recently, Shanghai or Shenzhen ) – would emerge on top. This theoretical debate is becoming more real as Japan begins to realise what the true value of a financial centre is, beyond being a symbol of prestige. This realisation has dawned suddenly and clearly, and has implications for other countries such as China . A financial centre is not just about earning revenue (and creating employment) by providing services such as foreign exchange and securities trading, or other offshore activities. It is about the need to deploy domestic financial assets more effectively at home and abroad. This is why the FinCity.Tokyo organisation, launched by the Tokyo metropolitan government together with 42 Japanese and foreign financial institutions and other organisations, is more than just another whimsical foray. Its core aim is not so much about boosting Tokyo as a financial centre per se, as about the training of Japanese in the science (or art) of fund management. And that is not because fund management, including investment banking, is viewed as a glamorous profession. Japan has some 1,900 trillion yen (US$18 trillion) in household savings, the largest in the world. But as experts such as analyst Jesper Koll notes, Japan is not good at managing these vast assets. The result is very low returns for savers including, critically, pensioners in Japan’s fast-ageing society with the mighty Government Pension Investment Fund down consistently and badly underperforming those elsewhere. When it comes to using national wealth efficiently, Japanese financial institutions are not exactly star performers either, when it comes to investing overseas. This applies as much to investing in Asian ventures as to overpaying for “trophy” assets in the United States. FinCity.Tokyo’s executive director Keiichi Aritomo (a former McKinsey consultant and accountant) is frank in acknowledging that Japan needs to sharpen its fund management skills, and that the way to do this is to import foreign talent. Japan needs “people who can train people on the ground”, he said. As Aritomo said to me: “Japan was very weak in rugby and football but we imported talent in the past and had them train up Japanese players. We don’t need to steal talent. We need to borrow people to inspire our own young people.” Tokyo is likely to be “borrowing” people on a large scale from now on, especially from Hong Kong, where expatriate fund managers – and Japanese nationals working here – are seen as being anxious about their future. Tax and other incentives such as office space will be used to lure them to Tokyo. There are larger dimensions to this debate. Finance has traditionally been looked down on in manufacturing nations such as Japan, when it is a means to maximising national wealth. Tokyo now gets it. Former Asian Development Bank president Mitsuo Sato, who died in 2002, once bewailed the fact that Japanese investors preferred to put their savings into exotic securities issued by obscure overseas entities instead of in Japan or in solid and worthwhile ventures elsewhere in Asia. That they were more or less forced to do so by virtue of poor fund management skills within Japan has not been well appreciated. But this could change as Tokyo (along with other Japanese financial centres such as Osaka and Fukuoka) nurture home-grown skills. To become a successful financial centre, a city usually needs a large economic hinterland capable of generating income from manufacturing and services as well as from foreign trade. London and New York qualify in this regard and financial services have developed there to match the need. But a “financial hinterland” also matters, and Japan clearly has that, given its enormous domestic savings, not to mention its own manufacturing and trading capabilities. But Japan has never exploited this financial hinterland to full effect. What applies to Japan, also applies to China in this connection. China earns huge export surpluses, yet these have chiefly found their way into passive investment in US Treasury bills (or in the Belt and Road Initiative ), rather than being actively deployed overseas by Chinese fund managers. China can take a leaf out of Japan’s book and develop fund management talent in centres such as Shanghai and Shenzhen (and perhaps, prevent an exodus of such talent from Hong Kong). Meanwhile, Singapore’s hinterland is Asean, the Association of Southeast Asian Nations. Which of Asia’s financial centres will be the winner? The fact is, they can all be winners, provided they play their cards right and keep in mind that finance is a means to a wider end. That end needs to be clearly identified and targeted – as Japan has now realised. Anthony Rowley is a veteran journalist specialising in Asian economic and financial affairs