When a Shanghai government official sought advice from JP Morgan's China investment banking chief Fang Fang on how to transform the city into an international financial centre, his response was very simple: attract money.
"You need to try to find a way to attract as many international and local fund managers to Shanghai as possible," Mr. Fang recalled telling the official three years ago.
In that respect Shanghai, which is aiming to become a global money hub like New York or London by 2020, has certainly made progress.
It has courted over 50 private equity management firms to the city, including big names such as Blackstone, Carlyle Group and TPG Capital, after the government opened the doors to foreign firms in 2008.
Already a commercial hub, China's most populous city - with around 23 million people - has also been taking other steps towards reclaiming a status it held in the early 1900's, when it was dubbed the financial centre of East Asia, with foreign banks and trading houses lining the now-iconic Bund.
Shanghai is now in the midst of building a new financial district on the other side of the Huangpu River, filled with skyscrapers including the 128-storey Shanghai Tower, which is slated to become the world's tallest building when it is completed in 2014.
It is also planning to launch an international board on its stock exchange, possibly by the end of this year, that would allow foreign firms to list on the mainland for the first time. A slew of major foreign firms, most recently Coca-Cola Co. on Wednesday, have expressed interest in listing once it is launched. But that's not going to be enough.
The most obvious hurdle facing Shanghai is China's tight control over the flow of capital, which is crucial for any international financial centre.
Another challenge, which is often overlooked, is the strong sway that the capital Beijing holds over economic and financial affairs.
Unlike in many other countries that have separate financial and political centres, such as Germany and Australia, all the key Chinese economic policymakers, such as the central bank and financial regulators, are based in the capital.
"In China, the decision-making is in Beijing. The decision-making for money-moving is in Beijing," said the China head of a major European investment bank who declined to be named.
That and the fact that most state-owned enterprises, which are banks' key clients, are also in Beijing, are the main reasons why all the top four domestic lenders and most major Western investment banks' China operations have their headquarters there.
"Why would I have to stay in Shanghai? Every afternoon I have to fly to Beijing," the executive said.
Unfortunately for Shanghai, this landscape is unlikely to change.
"Of course it would be better if at least the central bank is based in Shanghai, but this isn't a Chinese reality and will not become one because the central bank is essentially a political institute," said Horst Loechel, director of the German Centre of Banking and Finance at China Europe International Business School (CEIB) in Shanghai.
"Shanghai has to live with this disadvantage," he said, adding that the most realistic solution to this would be to appeal to the central government to have the regulators move some of their operations from Beijing.
Another challenge is a shortage of talent. The number of skilled workers has failed to keep up with the rapid expansion in the country, leaving many firms, especially in the banking sector, faced with soaring labour costs.
One way to lure talent is cutting the municipality's high income tax rate, which is seen as a deterrent for those contemplating a move from low-tax base centres such as Singapore and Hong Kong.
A banker, for example, with an annual salary of 1.2 million yuan ($185,100 U.S.) would be taxed at around 30 per cent in Shanghai, nearly double that in Hong Kong.
Local authorities have the power to give tax breaks on foreign workers, although it is not allowed for Chinese nationals.
While some doubt whether Shanghai can achieve this ambitious goal by 2020, it seems that the fundamentals are on its side in the longer run.
"What matters at the end of the day is the size of the economy behind the financial centre and there is clearly no chance for Singapore to compete with Shanghai in the long run," CEIB's Loechel said .
($1 = 6.483 yuan)
Follow us on Twitter: