Just two years ago, most people thought London and New York were the world's financial centers. But in an article contributed to the Financial Times on Sunday, Yale School of Management Professor Jeffrey Garten wrote, "Once the global recovery begins, however, New York and London might be vying less with one another than with a new competitor in the form of a partnership between Hong Kong and Shanghai -- call it "Shangkong" -- a highly consequential shift of financial gravity to the East."

Garten predicted that London and New York would suffer serious side effects of the global economic crisis. The astounding fiscal deficits racked up by the two cities would lead to higher taxes and cutbacks in spending on transportation, education, culture and other public services, losing the incentives those metropolises offered to talented professionals from around the world.

In contrast, Garten diagnosed China as having the attributes to become a global center of finance. He said China is home to many large banks with sound capital bases, while having a pool of major corporations that have either listed themselves or plan to do so on the Hong Kong and Shanghai bourses. China is also seeing a rapid rise of the middle class, which boasts high savings rates. China does not possess the intricate financial systems of Wall Street or London's financial district. But Garten says that a simpler economic system may be an improvement over the complicated and opaque financial products which caused the present situation.

China's economic growth rate, which is still more than 6 percent, combined with the declining luster of the U.S. dollar are also boosting China's status.

Garten predicts that China will rise to become a global financial center if Shanghai cooperates closely with Hong Kong and provides financial know-how. China has announced plans to turn Shanghai into a global center of finance within 10 years and has begun establishing cooperative ties between Hong Kong and Shanghai. Pacts have been signed between Hong Kong and Shanghai, as well as other major Chinese cities to authorize transactions in yuan.