Shanghai still faces skills shortage

This time last year, China's leaders announced plans to develop Shanghai into an international financial centre by 2020, but, with just 10 years to complete the transition, the city faces a skills shortage. In our web poll last week, FinanceAsia readers said that it is still far harder to hire finance professionals in Shanghai than in either Hong Kong or Singapore.

And the skills shortage is but one of the obstacles Shanghai must overcome to transform into a globally competitive financial centre, argue market participants. China's currency is still not freely convertible and the rule of law is perceived to be far weaker than in Hong Kong, Singapore or even Mumbai. The government's "direct and discretionary control over the national economy" is also a worry for foreign investors, according to Winston & Strawn, a US law firm that published a report last year on Shanghai's progress towards becoming a financial centre.

Our readers certainly agree. When asked which city is the hardest place to hire finance professionals, 65% voted for Shanghai, compared to just 19% for Singapore and 16% for Hong Kong.

Shanghai's market capitalisation is bigger than both Hong Kong and Singapore, but it still lacks the financial infrastructure to compete with them as a regional centre. Also, few foreign financial professionals are keen to move from low-tax jurisdictions, such as Hong Kong and Singapore, to a city where income tax rates are close to 50%.

But it rarely pays to underestimate China. "Judging by the government's ability to turn China into one of the world's leading economies within less than 30 years, there is certainly hope for Shanghai," wrote Winston & Strawn.

Photo provided by AFP.