Shanghai was listed sixth in a ranking of the most competitive financial centers in the world, behind New York, London, Tokyo, Hong Kong and Singapore, in the Xinhua-Dow Jones International Financial Centers Development Index (IFCD Index) issued in July.

However, I still have doubts as to Shanghai's ability to become a global financial hub until the following problems are tackled.

Admittedly, Shanghai has shown great progress in a number of areas, including financial talent and foreign financial institutions, over the last few years. As of the end of the second quarter of this year, 332 transnational enterprises had established regional headquarters in the city, including HSBC and Citigroup, while at least 325 foreign-funded research and development centers were established in the metropolis.

Then of course there is the plan to launch an international board on the Shanghai Stock Exchange, and the trial program for cross-border yuan trade settlement.

However, Shanghai lags some way behind other international financial centers in terms of market openness, size, diversity, and sophistication of the products available.

Before making Shanghai's market open to the world, China should firstly work on full currency convertibility and open yuan-denominated A-shares to foreign investors. This would give foreign investors more flexibility.

However, such openness cannot come about in the near-term due to the current stringent government controls over financial operations and derivative products.

In contrast to other developed countries, China regulates the financial sector mainly through government policies rather than putting the onus on market forces.

The country's central bank and the big four State-owned banks, who account for the majority of capital flow in the domestic banking market, are headquartered in Beijing rather than Shanghai. This denies financial resources to Shanghai, including talent, capital, and more importantly, firsthand information from the headquarters. All these factors have contributed to inefficiency in financial operations in Shanghai.

What's more, Shanghai's number of financial professionals is around 240,000, accounting for just 3 percent of its local labor population, far less than other international financial hubs, such as New York, which has over 800,000 professionals accounting for up to 12 percent of its labor force.

Shanghai, and China in general, has not developed an education system that effectively cultivates financial talent, falling far short of what it needs to be for a city that aims to shape itself into an international financial center.

Undeveloped protection of employee rights in Shanghai also hinders its attempts to attract foreign talent with experience in international finance.

Foreign financial institutions also suffer from the weight of the various requirements of the financial regulator before they are able to establish offices in Shanghai.

Another factor is that Shanghai faces fierce competition from Beijing and Hong Kong. This is in marked contrast to other international financial hubs, which are the clear leaders in terms of financial services within their own borders. Shanghai has a large number of listed companies and foreign financial institutions, yet lacks the ability to draw up policies that Beijing has, or a financial system that is fully open to the global market, such as Hong Kong's.