WHEN Shenzhen and Hong Kong deepen their cooperation, the two cities are expected to become the third-largest financial center in the world after New York and London, according to financial experts.

“An increasingly closer partnership between Shenzhen and Hong Kong in financial business is necessary and a win-win deal for the two cities in their future economic development,” the Shenzhen Special Zone Daily said yesterday, citing financial experts in Shenzhen and Hong Kong.

However, the report did not elaborate on how it had come to the conclusion that Shenzhen and Hong Kong would become the world’s third-largest financial center.

As a mature market, Hong Kong has a sound financial system that is well-connected to the global economy. As it is being close to Hong Kong geographically, Shenzhen is expected to benefit substantially from its neighbor in many ways, including advanced management modes.

On the other hand, Shenzhen is a young and fast-growing economy with great business potential, which presents Hong Kong unlimited opportunities.

Financial institutions in Shenzhen and Hong Kong will benefit from the fast development of Shenzhen’s high-tech, finance and logistics industries, as well as its large-scale infrastructure construction, which requires a large capital investment of up to 160 billion yuan (US$21.92 billion) in the near future.

In addition, Shenzhen can also serve as a platform for Hong Kong financial institutions which want to tap into the vast mainland market.

The mainland has been undergoing fast, two-digit growth in the past few years. The mainland market is a great incentive for financial companies from Hong Kong and countries around the world.

However, the differences in political and social systems between the mainland and Hong Kong may pose a barrier for smooth cooperation and business growth in a full scale.

By partnering with Shenzhen, which has a sound investment environment and relatively comprehensive financial system on the mainland, Hong Kong financial institutions will be able to sharpen its competitiveness in the face of other global rivals.

To maintain its status as Asia’s premiere financial center, Hong Kong has to take advantage of the mainland’s fast growth and vast market potential.

The two cities have a long history of being partners in the financial business. In 1982, Hong Kong’s Nanyang Commercial Bank opened its first mainland branch in Shenzhen’s Luohu District, signaling the start of partnerships in the finance sector between Shenzhen and Hong Kong.

With the opening of the mainland’s banking and financial sector in December 2006, a number of Hong Kong banks have registered to set up their mainland offices in Shenzhen, attracted by low operating costs and great growth potential.

(Wei Jie)