(本文翻譯自 陳冲 金融中心三城記 台北獨憔悴 2022-07-11)
In early July, The Economist published an article, A tale of three cities, discussing the battle between Asia’s financial centers. I just couldn’t help but feel sad for the withered Taipei.
In the 19th century, former US Secretary of State John M. Hay once said “The Mediterranean is the ocean of the past, the Atlantic is the ocean of the present, and the Pacific is the ocean of the future”, hinting the importance of the Asia-Pacific region in the 21st century. Therefore, the western countries, although much debate, were not so surprised when Jeffrey Garten, dean emeritus at the Yale School of Management, published the article, From Nylon to Shangkong, in the Financial Times in June 2009, saying that the financial center is now moving eastward. The Nylon in the article refers to New York and London, while Shangkong refers to Shanghai and Hong Kong.
In June 2008, I was invited to give a speech in Hong Kong as the chairman of the Financial Supervisory Commission. Hong Kong media called it the highest-level visit from Taipei since 1997 and there seemed subtle atmosphere changes among Mainland China, Taiwan and Hong Kong. I quoted Garten’s article in the speech, noting that after financial tsunami, many opportunities are there in the region. In November the same year, after five months of negotiation and communication, China Banking Regulatory Commission, Securities Regulatory Commission, Insurance Regulatory Commission and we Financial Supervisory Commission signed three financial MOUs in a reciprocal, non-white-glove, official-to-official manner. Afterwards, the tension eased and the cross-trait financial cooperation turned toward a positive direction. After that, the former ambassador to the United States, Lyu-hsun Shen, revealed that the MOUs broke the white-glove rule conveyed implied meaning and even raised US concerns then. Whether the MOUs involved geopolitics remained unclear, but at least the completion of the memorandums somewhat directly affect Taipei’s competitiveness as a financial center. As we can see, Taipei ranked 19th, the best ever, of the GFCI ranking in the following year. It showed that the international financial community had at least witnessed and even recognized Taipei's financial potential.
In March this year, the GFCI announced the latest ranking, and Taipei dropped to 66th. The descendent might be predictable but it’s still emotionally unbearable when I found that Taipei is actually the last but one among the 20 cities in the Asia-Pacific region. When the international media talks about Asia-Pacific financial center in recent years, the word Taipei has already disappeared. Well, it figures. When it comes to financial center, Hong Kong has always been the first in the Asia-Pacific region but the 2019 anti-extradition law amendment bill movement, although Taiwan enjoyed the political arbitrage in elections, made the international community re-examine Hong Kong’s status. The original faith that Hong Kong's legal system could be a springboard to entering China seemed to be faltering. Foreign companies started to set up Asia-Pacific headquarters these years. Hong Kong and Singapore have achieved their own success. In terms of wealth management business, Hong Kong has grown from 1.3 trillion US dollars to 3 trillion US dollars in ten years, but Singapore has jumped from 1 trillion to 3.4 trillion at the same time. But in terms of market capitalization, Singapore Exchange falls behind Hong Kong and Shanghai. The tug-of-war of financial business in the three cities still continues.
Sorting out the operating model of international companies in Asia-Pacific, we can find that companies tend to take Shanghai as the springboard for China, and Singapore for Asia-Pacific. There is no more special love for a specific city. Although recent Shanghai’s lockdown lowers people’s confidence, it’s believed that everything will be back on track later. Whatever the outcome is, Taipei seems to be getting farther from being a financial center. And things will get worse if we don’t strengthen fintech competitiveness now, such as the development of CBDC (central bank digital currency), due to unnecessary concerns.
Taipei has its own way and it doesn’t necessarily have to be a financial center (or an offshore RMB center). But it doesn’t mean that it needs to draw self-limit lines and discard its internationally-recognized financial potential or the existing trade and geographical advantages. A wise government is the one that leverages its own status, jumps out of the outdated framework, and shapes good environment for next new financial development.