Xiamen city is striving hard to develop itself into a regional financial center on the mainland, Liu Cigui, the city's mayor, told Hong Kong media Thursday.

"It has always been the mission of the city government to develop the city into an major financial center in the region," Liu said, fielding media questions on a trip here to promote the 14th Chinese International Fair for Investment and Trade (CIFIT) and the 2nd World Investment Forum, to be held in Xiamen on September 6 and 8, respectively.

The World Investment Forum is a global forum organized by the United Nations Conference on Trade and Development, while the China International Fair for Investment and Trade is currently China's largest international event for promoting bilateral investment and trade.

Liu said Xiamen has many advantages in its drive to become a regional financial center.

One is historical. The first foreign-funded bank on the mainland, which is now known as Xiamen International Bank, opened in Xiamen in 1987.

Moreover, the first Taiwan-funded bank and Taiwan-funded insurance company on the mainland have also opened their first branch in the city, he said.

An additional advantage the city has is the variety of financial services available in the city now, which include banking, insurance and securities

However, Daniel Chan, senior investment strategist at DBS Bank, was reserved when commenting on the mayor's talk of building the city into a financial center.

The success of a financial center depends on a multitude of resources such as infrastructure and high-level human talents, he said.

Even if these basic requirements are met, there is still the problem of capital flow, he cautioned.

"Free capital flow is always the problem. It is extremely important, but even Shanghai has yet to achieve free capital flows, and there is little chance that Xiamen will find it easier," Chan said, adding that "it takes time."

Xiamen will also have to brave the challenges from other financial centers like Hong Kong should it also become one someday. After all, financial centers like Hong Kong, Sydney and Singapore are not built overnight, he said.

In contrast to Chan and his conservative stance, Chak Wong, a professor of finance at the Hong Kong Chinese University, has a more positive view.

Every region needs a financial hub to meet demand for financial services, he said, adding that size is the only issue to be addressed.

"Even a city can have its own financial center, thus enabling the production of tailored financial services to best serve other industries," he said.

Still, Wong doesn't think a Xiamen role as a financial center will pose a threat to the status of Hong Kong as a world-class financial center. "It's not a zero-sum game. It (Xiamen's becoming a financial center) won't necessarily hurt Hong Kong," Wong opined.

Liu said there are now 34 banks operating in Xiamen, of which 17 are foreign-owned or are jointly-owned by foreign investors and domestic investors.

The mayor also emphasized the need for Xiamen to build a strong financial industry, given the increasingly closer exchanges across the Straits. "As a special economic zone and a central city on the western coast of the Taiwan Straits, Xiamen has exemplified itself as the spearhead of development," he declared.

China Daily