Business seats on flights from Hong Kong to Beijing and Shanghai are now packed full on Monday mornings and Friday evenings, according to China’s banking regulator, Liu Mingkang.

A decade ago, the migration was in the other direction, with migrant labourers from China flooding into Hong Kong. The reverse commuting from Hong Kong is one sign of the growing economic importance of mainland China compared to its former colony. And Shanghai’s vibrant shopping streets now attract visitors from Hong Kong and around the world.

But residents of Shanghai –  whose per capita income, though it is the highest in China, is still well below people in Hong Kong  – still envy their richer cousins. And according to Professor Saskia Sassen, an expert on globalisation, Shanghai is still lagging behind Hong Kong as a truly global city. But will it overtake its rival in the race for financial supremacy? In the 1980s, Hong Kong was the vital entrepot between mainland China and the outside world. Goods assembled in China were re-exported through Hong Kong, while financial and business services were provided for Chinese companies that traded with the West.

When the Chinese government decided to open up its economy to foreign investment, the first special economic zone –  Shenzhen – was chosen for its proximity to Hong Kong. Many Hong Kong businesses, especially in textiles and clothing, relocated, bringing expertise and capital to the mainland. But by the 1990s, it had become clear that China’s economic policy-makers were tilting towards the development of other economic regions, especially Shanghai and Beijing, as the leading centres of foreign investment.

A clique of leaders including Zhu Rongji approved the expansion of the city on its eastern bank to create a new financial district.

According to Professor Sassen, Hong Kong still has advantages that Shanghai cannot match.  Hong Kong is a world city, with its financial markets more attuned to the innovations in global capital markets. In her view, Hong Kong is closer to New York, and Shanghai to Chicago – a huge city serving an industrial hinterland, with specialist financial and trading services evolving to smooth the path for industry. If China decides to accelerate the liberalisation of its currency, it could be that Hong Kong will play an even more important role in currency trading. The new Chinese leadership has emphasised the need for balanced growth, with less disparities of wealth and more priority for the rural hinterland. So it may be that rather than rivals, Shanghai and Hong Kong become complementary parts of the Chinese economic miracle.

BBC News Service