By Chris Zani, Portfolio Manager Quantitative Equity at PGIM
When I arrived in Beijing, I was surprised - not by how organized, efficient and well-structured everything was, nor by the number of international professionals I encountered, including many Americans working between China and the US. These aspects of China’s rise are well known. What surprised me was the transition of Beijing into a central hub of government and finance.
Often, a country’s political and its financial center are in different cities. Switzerland is a good example: Bern stands for politics, Zurich for finance and business, while Geneva plays a central role in diplomacy, international organisations and private wealth. This division of roles feels natural from a Swiss perspective. In many emerging markets, we see similar patterns: Brazil is a case in point: although it is a highly interesting emerging economy, I have never even been to its capital, Brasília. There was no need, because São Paulo and Rio de Janeiro are where most of the country’s business activity takes place.
Beijing as a New Financial Center
Similar patterns can be observed in India and South Africa, while some EM countries do combine their political and financial centres, such as South Korea or Russia. For this trip, my hotel was literally on Beijing’s Financial Street — sometimes referred to as the «Wall Street of China» — and this neighbourhood alone is a good reminder of the changes, the country went through over the years. At first glance, one might think of China as another example of a geographic separation between political and financial centres, with Shanghai and Hong Kong serving as the main financial hubs.
