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CHAMBER PROGRAMMES
December 2001 Issue  SC banking on the Mainland China market  Hong Kong has everything to gain and very little to lose from
China's WTO accession
China's entry into the World Trade Organisation (WTO) will have more far-reaching implications than the terrorist attacks on the U.S., and will alter the shape of world trade and accelerate its growth, Standard Chartered Group Chairman Sir Patrick Gillam told members at a Chamber 140th Distinguished Speakers Series luncheon on November 19. "There will be bumps along the road. There will be setbacks. But the next half-century promises to be a very special time for China. The world will focus on China, and it will be the envy of the world," he said. Hong Kong has everything to gain from China's entry, but there is a danger that all the talk of doom and gloom among businesses in the SAR and a general lack of confidence will do more harm than the economic downturn. "For China, joining the WTO is a journey, not a destination," he said. "Hong Kong has nothing to fear from WTO -- quite the reverse. It is the premier international financial centre in the region. It has the most liquid stock market and is the main centre of international expertise. It is the biggest investor in China, the biggest provider of professional skills and it remains Chinas biggest gateway." The current global economic situation is testing everyones confidence, and is challenging Hong Kong's abilities, but he points out that London, New York, Singapore and just about every city around the world is also having to deal with these challenging times. "I have absolutely no doubt about Hong Kong's continued prosperity. Yes, changes are required to education, to governance, to infrastructure. And yes, the divide between the rich and the poor needs to be managed. But as we look to the development of China, Hong Kong has everything to gain, and very little to lose," he said.  Banking on China
China's pace of reform is clearly illustrated in its banking sector, he said. Already, its new breed of leadership in the major banks and regulatory authorities are earning great respect through enacting much needed reforms. Foreign banks, however, will still find it difficult to increase their share of the Mainland market. "All the foreign banks in China combined account for less than half a per cent of banking deposits and less than one and a half per cent of lending. Between us all we have just over 450 bank branches, compared with nearly 190,000 controlled by domestic banks," he said.The big state-owned banks will still dominate the industry, but as they reorganise and reform, new and smaller non-state-owned banks will benefit because, being free of debts and bad loans, they will be able to change quickly to meet consumer needs. He expects foreign banks will benefit from China's rising middle-class customers, who are particularly receptive to banking with foreign institutions and are interested in products like credit cards, mortgages and investment services, he said. "But this needs to be kept in perspective. We think that by 2010, all the foreign banks combined will still account for less than 10 per cent of total lending," Sir Patrick Gillam said."However, for the foreign banks involved, like Standard Chartered, even a small share of the China market will have a very significant impact on revenue and profit. It is a hidden jewel in our crown." |
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