SHANGHAI people seem universally convinced that their city is China's premier business centre. But a list of "China's top 10 business cities" released in September challenges this assumption (see the story "Toppling the dragon's head" in the September 30 issue).

On the list produced by the Chinese edition of Forbes, Shanghai only makes the fourth place among Chinese business hubs. The top three are Hangzhou and Ningbo of Zhejiang Province and Dalian of Liaoning Province.

This result is described as "unconventional" by the Oriental Morning Post, which comments: "Shanghai is the dragon head of the Yangtze River Delta and the city producing the largest GDP in the country. But the rocketing price of real estate and the constant traffic congestion as well as excessive population detract from Shanghai's status as a business city."

Zhu Lianqing, director of the Commercial Research Centre at the Shanghai Academy of Social Sciences, takes the production of the list as good news, at least it serves as a "warning and nudge" to the city government, investors and proud Shanghai residents.

"Large absolute values such as GDP, average income and population are not always the most meaningful indicators when it comes to appraising a good business hub," the expert said.

"Shanghai is a very highly regulated business environment. It is not regulated by the market, however, but by the government administration. That's why it can't compete with the other smaller cities mentioned by Forbes."

But other experts suggested the list was unbalanced and failed to adequately capture Shanghai's advantages.

"The Forbes list of top 10 business cities seems unbalanced. They put too much emphasis on the private economy, instead of measuring the comprehensive capabilities of the city of Shanghai," said Hua Min, director of the World Economy Research Institute of Fudan University.

"This list mainly targets private enterprises," said Zhou Peng, editor-n-chief of the Chinese edition of Forbes magazine.

Hangzhou, with its active private economy, came top of the list. In the city, 98 per cent of enterprises are private, with over 80,000 businesses of this type playing the main role in the Hangzhou economy.

In its comments on the list, Forbes said the rapid increase in real estate prices and traffic congestion were the main factors depressing Shanghai's ranking.

"The high price of real estate, which is a very important index when evaluating the investment environment in a city, leads directly to high business costs. This is definitely a problem in Shanghai," Zhu said. When it comes to attractive - low - business costs, Shanghai is listed in 176th place.

The annual increase in office rents in Shanghai was 9.7 per cent. The rise was the highest in Asia, according to statistics from Cushman & Wakefield, a leading property management company.

"I know some foreign investors have moved out of Shanghai for this reason," Hua said.

Among the top three cities on the list, the first two (Hangzhou and Ningbo) are both located in the Yangtze River Delta, where Shanghai is considered the regional centre. Among the top 10, seven cities are located in this area.