The People’s Republic of China and the United States of America own the world. There is a simple metric that shows how these two nations dominate the globe.
The metric is a list of the world’s largest financial centers, Statista’s Research Department compiled in March 2023. Ten of the 15 leading financial centers were American or Chinese cities. If finance is power, America and China run the world, and no other region or country comes close.
- London (United Kingdom)
- New York City (USA)
- Singapore
- Hong Kong (China)
- San Francisco (USA)
- Los Angles (USA)
- Shanghai (China)
- Chicago (USA)
- Boston (USA)
- Seoul (South Korea)
- Washington, DC, (USA)
- Shenzhen (China)
- Beijing (China)
- Paris (France)
- Sydney (Australia)
Statista’s list contains four Chinese financial centers, Hong Kong, Shanghai, Shenzhen, and Beijing. Comparatively, it contains six US cities, New York, San Francisco, Los Angeles, Chicago, Boston, and Washington, DC.
Hence, the two largest economies contain 10 of the 15 largest financial centers. Moreover, many people will argue that Singapore (the world’s third-largest financial center) is an ethnically Chinese city that functions as an offshore financial center for the People’s Republic. Similarly, you can argue London functions as an offshore financial center for the United States and Canada.
Where Finance is Absent
What’s most telling is what is absent from the list of the largest financial centers. For instance, there are no Islamic, Latin American, or African cities on the list. More striking is the absence of Indian cities from the list. Although London and Singapore function as offshore financial centers for the Republic of India.
Similarly, only one city in the European Union, Paris, appears on the list. Moreover, Paris was the 14th largest financial center, ranked below Seoul and Boston. Some of Europe’s historic financial centers, such as Amsterdam, Frankfurt, and the Swiss cities, are not on the list. Historically, London, which was in the European Union until recently, was Europe’s financial center.
Also notably absent is Tokyo, which many people consider a major financial center. Interestingly, five of the world’s 10 largest economies, Japan, Germany, India, Italy, and Canada, have no cities on the list.
Strangely, Toronto is absent. Many people will argue that US cities such as New York and Chicago serve as financial centers for Canada. However, New York, LA, and San Francisco serve as financial centers for Latin America.
Manufacturing is Power
Statista’s financial centers list shows that manufacturing leads to financial power.
To explain, 10 of the 15 largest financial centers are in the world’s two largest manufacturing nations. In 2019, the People’s Republic of China was the world’s manufacturing superpower with 28.7% of global factory output, Statista. The United States was the second largest manufacturing country with 16.8% of global output in 2019.
I think the rise of Chinese manufacturing is why four Chinese cities are major financial centers. Interestingly, China’s two top manufacturing cities (Shanghai and Shenzhen) are also its two largest financial centers. It is also notable that of America’s three largest financial centers, San Francisco and Los Angeles, are on the West Coast and in a position to tap Chinese industry.
It is also notable that only one large financial center (Sydney) is in a nation that relies on resource exports (Australia) to drive its economy. Cities in the world’s largest resource economies, such as Russia, Saudi Arabia, Indonesia, and Chile, are absent from the financial centers list. I might note that Miami, which functions as a shopping and banking hub for Latin America, is not a large financial center.
Moscow, St. Petersburg, Rio de Janeiro, Santiago, Dubai, and Riyadh are not on the list because oil sheikhs, oligarchs, oil executives, and mining barons do their banking in London, Singapore, and New York. Hence, US, British, and Singapore banks extract much of the wealth after it leaves the ground. This wealth extraction is moving to Shanghai and Beijing as sanctions drive Russian oligarchs to do business in Yuan (China’s currency).
The problem for the global south and Russia is that natural resources’ value comes from the goods people manufacture from them.For example, the true value of oil comes from refineries that make gasoline or plastics factors. The value of minerals comes from steel mills and the value of lithium from battery factories. Unfortunately, for Africans, Indonesians, Russians, and South Americans, the factories are in Shenzhen, or Ohio, or the Ruhr. Similarly, the oil refineries are in Texas, or Scotland, or Guangzhou.
Thus, there’s another reason Americans need to fear the decline of the US industry. US financial power could crumble as US manufacturing decays and moves offshore. Notably, the US’s second largest financial center is San Francisco, which is next to Silicon Valley. Los Angeles is the center of America’s entertainment industry, which is the world’s most influential.
Money Follows Power
One surprise on the list is the capitals of the world’s two richest countries. Washington, DC, was number 11 and Beijing number 13. Other capitals on the list include Paris (14), London (2) and Seoul (10).
This shows there is a correlation between government power and wealth. Finance and politics are becoming intertwined, which shows the idea of free enterprise is a myth. Finance depends on government and military power.
The new geography shows dramatic change. In particular, financial power is shifting to the Pacific and Asia. For example, two US Pacific cities (San Francisco and LA) are on the list. So are Sydney, Singapore, Shenzhen, Shanghai, Seoul, Hong Kong, and Beijing.
In contrast, financial power is shifting away from Europe. Only two historic European financial centers (London and Paris) are on the list. Historic European financial centers such as Amsterdam, Frankfurt, and Geneva, are missing. Moreover, only three Atlantic cities (London, New York, and Boston) make the list.
The world’s financial power has shifted away from Europe. Hence, Asia is now the future because money follows power. Speculators, investors, and policymakers need to examine Statista’s financial centers list because it shows where the money is flowing. The money is flowing to America and China, so invest accordingly.
