Shanghai ranks 8th in world's financial center

A man scans the Lujiazui financial center in Shanghai. The city aims to become a global financial center. [Zhang Heping / for China Daily]

SHANGHAI - Shanghai is the eighth most competitive financial center worldwide according to a report issued on Thursday by Xinhua-Dow Jones International Financial Centers Development Index (IFCD Index).

The report said that New York is the world's top financial center, with London and Tokyo coming in second and third place. Shanghai, which aims to become a global financial center and shipping hub, is ranked eighth in the report, demonstrates the city's outstanding economic growth and rapid development.

The IFCD Index report takes development capability as an indicator for the first time to measure candidate cities' qualifications.

A total of 45 international financial centers are included in the shortlist, with the top 10 being New York, London, Tokyo, Hong Kong, Paris, Singapore, Frankfurt, Shanghai, Washington DC and Sydney.

Combining 66 objective indicators and 2,386 questionnaires, the IFCD Index selected 45 financial cities as samples, and set up a comprehensive evaluation system. The objective indicator system assesses international financial centers based on five aspects or indicators - the financial market, growth and development, industrial support, service and the general environment.

According to the report, the candidate cities are all world-famous financial centers with strong recognition and widespread influence.

Europe has the most financial centers with 21 cities in the shortlist, followed by Asia-Pacific and Africa with 14 cities each. America has 10 cities with eight coming from North America.

Three cities from the Chinese mainland appeared in the list: Shanghai ranks 8, Beijing 13 and Shenzhen 22.

"The major characteristics that distinguishes the IFCD Index from other indexes is that the design of the valuation system gives weight to financial market development and the financial ecological environment, considers the complex environment of cities, countries and regions, and puts emphasis on the growth of international financial centers as well as their level of maturity," said Lu Wei, vice-president of Xinhua News Agency.

The IFCD Index provides tips for Shanghai and other Chinese cities which seek to build themselves into globally influential business hubs, said Chen Daofu, an expert from Development Research Center of the State Council.

Liu Shengjun, deputy director of China Europe International Business School Lujiazui International Financial Research Center, said Shanghai's ranking is comparatively higher in the report than it is in reality.

"A real international financial center needs to be more open, with larger capital liquidity, and it should be a place for international players to invest freely. In that sense, Shanghai is not even an Asian financial center yet," said Liu of China Europe school.

"It is a good thing to have government support, but administrative efforts can only be effective in the short term. In order to draw more global investors, Shanghai must learn from cities like New York and Tokyo," said Liu.

The IFCD Index was the first launched since a memorandum of understanding (MOU) was signed between China Finance Corporation (CFC) Holding Company Ltd, a subsidiary of Xinhua News Agency and Chicago Mercantile Exchange (CME) Group Index Services LLC, or Dow Jones Indexes on Wednesday.