Currently, over 80 percent of China's capital goes through Beijing for checking. Besides this, over 80 percent of China's banks, insurance companies, security companies are headquartered in Beijing, which also accommodates regional branch offices and research organizations of 293 Fortune 500 enterprises.

What matters more is that Beijing is the birthplace of China's financial policies, where the central bank-People's Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission are located.

"With strained land resources and environmental protection pressures, Beijing is not ideal for a labor-intensive manufacturing industry, but is for a high-end service industry. Finance is therefore bound to be a pillar industry of its economy," added Zhou.

However, that does not mean overturning its past function as a political and cultural center. Stronger financing power will render Beijing more able to fuel its tertiary industry, according to Huo Xuewen, Director of Beijing Municipal Financial Service Office.

Beijing or Shanghai?

Beijing's financial commitment has obviously made some other Chinese cities fidgety, especially Shanghai, which has long been geared to join international financial centers.

Some fret that Beijing's rise might blur the prospect of Shanghai becoming an international financial hub and dilute the competence of China as a whole. Others argue that Shanghai will by no means drag its feet on the path of development on the back of a buoyant financial market.

But neither of the two cities seem capable of overshadowing each other in terms of financial prowess. Beijing's financial sector was worth 112.63 billion yuan ($16.1 billion) in 2007, making up 12.5 percent of its GDP, while that of Shanghai totaled 119.57 billion yuan ($17.1 billion), or 10 percent of its GDP. Beijing is currently home to 677 financial institutions, including 234 banks, 59 security institutions and 117 insurance companies, while Shanghai hosts 604, including 109 banks, 94 security institutions and 261 insurance companies.

However, compared with Shanghai, Beijing's financial infrastructure has become a stone around its neck as it battles for a place in the world financial club.

The Shanghai Stock Exchange is the beating heart of Chinese finance, much like the New York Stock Exchange is for the United States. The Shanghai Gold Exchange and Futures Exchange also add importance to its financial market, further sharpening its competitive edge. "In stark contrast, Beijing is handicapped by lack of an influential financial platform despite numerous financial institutions," Qi Bin, Director of the Research Center under the China Securities Regulatory Commission was quoted by the 21st Century Business Herald as saying.

Beijing faces a decade-long gap to catch up with Shanghai due to a weak financial environment," Wang Gongwei, Chairman of the Board at Financial Street Holding Co. Ltd., pointed out.

But Shanghai's development will not come at Beijing's expense. "Shanghai's development can also breathe life into the finance of the whole country, as it can deliver better financial services to financial institutions of other places," Tu Guangshao, Vice Mayor of Shanghai said at the recently concluded Shanghai Lujiazui Forum.

Vice Premier Wang Qishan even projected at the forum that Shanghai's financial blueprint will finally come true as China deepens its financial reform.

No losers in a win-win game

While debates over domestic financial competition rage, some argue that China might need more than one financial center to drive its sprawling inland economy. "Shenzhen and Hong Kong will become the financial powerhouses for south China, and Shanghai drives the development of east China. As China's financial control center, Beijing will extend financial support to northern areas," Niu Fengrui, a researcher with the CASS told the 21st Century Business Herald.

"Each financial center is positioned variably, leaving the possibility for cooperation. And in the aftermath of market economy, competition can optimize the efficiency of resource allocation," added Niu.

As a matter of fact, multiple financial centers within a country are not without precedent. New York, the largest financial center of the United States, leads the world in stock and energy futures while Chicago is recognized as the global financial derivatives trade center.

Beijing has obviously sensed the opportunity it is blessed with. In close interaction with Tianjin, which aims to set up China's first over-the-counter stock exchange, it is lending substance to its pledges. Pilot fund programs will be started to help with small and medium-sized enterprise startups. A private equity fund council will also come into being.

Meanwhile, its three economic pillars-Financial Street, Central Business District and Zhongguancun Science Park-will further grow and add to Beijing's financial strength.

As a latecomer to the financial scramble, Beijing is increasingly unleashing its financial potential by stepping up favorable policies. CITIC Securities told the 21st Century Business Herald that it has decided to relocate its headquarters from Shenzhen back to Beijing. Beside this, some other fund management companies are also reportedly considering moving to Beijing.

Nevertheless, the markets should never be underestimated in creating a financial center. The history of the United States gives an example. Philadelphia was originally the financial center of America, but was gradually replaced by New York.

"It's the markets that call the shots on what will be the financial center, but not the government," Zhou Ziheng, a researcher with the CASS told Beijing Youth Daily.

Zhou also pointed out that China should not rush to precipitate a financial center on immature markets. China's financial security would be staked on its ability to fend off foreign speculators.