Hong Kong must give way to Shanghai in the nation's financial development, according to a top Beijing official, who sees the SAR role as being reduced to that of a "pawn."Xia Bin, head of the Financial Research Institute, which comes under the State Council's Development Research Center, also said there may be a change in the role of the Hong Kong dollar by 2020.
"Shanghai's financial market must eventually surpass that of Hong Kong's," Xia told the China Economic Times.
He described the years leading up to 2020 as a "strategic transitional period," when Hong Kong may serve as a "bridgehead" and a "buffer zone." Its main responsibility will be taking care of the yuan offshore market.
Meanwhile, Shanghai will focus on the overall financial market and also have a role in the US dollar and yuan offshore markets.
"Hong Kong will play second fiddle - a pawn - in the overall national financial development," said Xia, though "we will also explore ways to make the city further prosper and to upgrade and transform."
By 2020, according to Xia, the mainland economy will match that of the United States, especially in terms of purchasing power.
"The world's biggest yuan financial center will be in Shanghai," he predicted, and it would stand with New York and London as the top three financial centers in the world.
After 2020, Hong Kong's yuan financial market will be attached to Shanghai and the status of the Hong Kong dollar may have changed. "Both Hong Kong and Shan
ghai can be international financial centers but will have different roles."He also said Hong Kong should realize the advantages it receives under "one country, two systems," but its development should be in line with national strategy.
For Hong Kong and Shanghai to play their roles effectively, he added, a unified set of rules needs to be set for both cities to follow.
"For significant issues, we cannot give too much independent legislative power to the municipal governments," he declared.
Executive Council convener Leung Chun-ying, who is also a member of the Chinese People's Political Consultative Conference Standing Committee, said the SAR has to accept its limitations with regard to its land area and talent.
"Hong Kong is only one-tenth of New York and London," Leung said.
So the SAR should explore avenues beyond its financial potential.
