Shanghai has maintained its third-place ranking on a list of China's most competitive cities, but researchers said it may do even better in the future as central government plans to turn it into a major world financial center gain traction.

Shanghai came in just behind Hong Kong and Shenzhen, the Chinese Academy of Social Sciences said yesterday in its annual city competitiveness analysis.

The rankings of the top three have been the same since 2006. But officials at the academy pointed out during an online briefing that the state's plan to boost Shanghai's financial position will significantly help the city improve its competitiveness.

"I believe Shanghai will make a huge advance next year and that Chinese cities will become more important on the world stage, as established financial centers such as New York and London have been hard hit by the credit crunch," said Ni Pengfei, the chief compiler of the report.

Hong Kong came out on top because of its high-level legal and regulatory systems and transparent market environment, said Chen Xian, executive director of Shanghai Jiao Tong University's School of Economics.

Shanghai's advantage lies in its leading role in the Yangtze River Delta region. As Shanghai spurs economic development among surrounding cities, its neighbors are able to provide support in terms of talent, manufacturing and exports.

The State Council announced in late March that China will develop Shanghai into a major international financial center by 2020 and mapped out guidelines including more sophisticated investment products and favorable tax policies to attract international companies.

The city has been increasing efforts to strengthen financial regulation and remove impediments to international transactions. It will also seek to lure expatriates with better health care and educational facilities for their children.

"Shanghai's efforts to become one of leading financial hubs should help the city optimize its industry structure and improve its financial system," Chen said.

The report covered 294 major cities in China and assessed 12 factors in each, including the size of its economy, quality of life and economic efficiency.

Shanghai led all Chinese cities in terms of economic scale and infrastructure. It also did well in talent, capital and science and technology competitiveness.

But it lagged in cultural and environmental quality.

(Shanghai Daily April 15, 2009)