Shanghai is on track to becoming the world's largest financial centre in a decade, according to a new report.
KPMG and index compiler FTSE say that Shanghai will become increasingly important as China develops its stock, currency, bond and derivative markets.
One key development will be launch of the Shanghai stock exchange's international board, which the report says should happen in the near future.
That will allow foreign companies to raise funds by listing shares in China.
"A debut could conceivably occur before the end of 2011," the report says.
China's stock market has grown from $400bn (£250bn) in 2005 to $4tn in 2010 as more than 500 companies have gone public.
The report said that there was now room for sustained growth in debt and derivative markets, which are still in their infancy in China.
However, the report warned that there several challenges that needed to be overcome before Shanghai could compete with London and New York.
"Shanghai is still some way behind other financial centres in terms of market openness, size and variety, as well as sophistication of products," the report said.
The report said a key challenge would be liberalising China's currency, which is still tightly controlled.
Although China has taken steps to internationalise its currency, there are still limits on the flows of money in and out of the country.
China's relatively high tax rate for individuals could also make it difficult to attract talented professionals.
At up to 45%, it could put Shanghai at a disadvantage to regional rival Hong Kong, where taxes are up to 15% for individuals.