The face of one of the world’s biggest financial centers is changing fast. The banking scene here in Hong Kong has traditionally been populated by locals and expats. Now, mainland Chinese are coming for those same jobs. And succeeding. In the past decade, investment banks saw the largest increase in Chinese staff, compared to other sectors. 80% of firms saw at least a 20% increase in staff coming from the mainland. Even a typical expat pay package is changing. It used to include expensive perks like free housing, private school for kids and extensive time off. On average, Hong Kong expat packages are the 4th highest in Asia-Pacific after Japan, mainland China and India. But those expat pay packages are getting less cushy, with Hong Kong recently falling to a 5-year low. Hong Kong is known to be the investment banking capital of Asia. But slow growth has triggered a number of layoffs at global banks. And this is partially contributing to the exodus of expats here in the city. Just in the past year HSBC, Goldman Sachs, Deutsche Bank and Standard Chartered have announced a number of layoffs in their Hong Kong operations. All Western banks. And as mainland China positions itself to be more open to the world, it’s actually putting Hong Kong’s significance into question. After all, the population here of just about 7 million is minuscule compared to China’s population of 1.3 billion. Western companies used to see Hong Kong as an entry point into the world’s most populous country. But the question is increasingly being asked: Why set up your company right outside of mainland China, when instead you can just, maybe go into China? Of course, China has a number of restrictions on the amount of business foreign banks are allowed to do inside the mainland. And consequently, the rules are good for China’s homegrown banks, like Bank of China which is expanding not only in Hong Kong, but aggressively abroad as well. Let’s look at the signs pointing to this shift in Hong Kong’s banking landscape. China’s government is easing up on its regulations. It recently removed license requirements for foreign and joint-venture lenders in a number of financial services. And in January, China said it would open the country to foreign investment, including easing limits on investment in banks and other financial institutions. The moves are taking place as President Xi Jinping hopes to place China as the world leader in defending globalization and saying repeatedly he will keep the country wide open. Last year, the Shenzhen-Hong Kong Connect was launched which allow institutional investors to buy Shenzhen-listed stocks, which includes many prominent tech and consumer names. And in return, Chinese investors will have access to shares listed in Hong Kong. A similar model, the Shanghai-Hong Kong Stock Connect was launched in late 2014. Foreign investors are finding it easier than ever before to invest in the mainland. There’s also been newly established free trade zones identified in both Shanghai and Shenzhen, which allows unprecedented economic freedoms, similar to what can happen in Hong Kong. The global financial system is starting to take China, not necessarily, Hong Kong, more seriously. Last year, China’s currency, the Yuan, was added to the IMF’s global basket of currencies, which are currencies deemed safe and reliable, joining the dollar, euro, yen and the pound. China has impacted many global assets lately ranging from Manhattan real estate to Australia’s power grid. And now, the expansion by China’s mainland banks could have a far greater impact than just Hong Kong.