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2017
Asia Needs more Dialogue
Solutions to urban pollution may prove complex
Spread of ESGs could herald new global movement
Investing in quality education is imperative if India wants to reap demographic dividends
China needs to lead in new multi-stakeholder world
China’s B&R initiative leading a resurgence of Asia
Education is key - but long-term: Can we survive?
New wave of robots will be beneficial to all
China needs to continue with its ‘heavy lifting’
Time is right for Chinese firms to invest in Europe
Robots to the rescue for China?
Asian Multinationals are Going Global, But to Where?
China ratchets forward with energy efforts
China’s calm necessary for globalization push
Bridging managerial gaps involves trust-building
China well-placed to power its future through green technology advances
China's new 'springtime' is here
2016
China’s moves show it’s banking on the future
Mindset for action at the G20 summit will be determined by Chinese presidency
Chinese head-hunting intensifies for rare managers that can steer overseas firms
US talk of isolation jars with growing links in Europe and Asia
Electoral rhetoric on global trade not in sync with reality
Is it time to be prudent and consider austerity policies again?
What will we do if we have no oil?
Unlock talent by finding the right fit for a person
The benefits are real and tangible
Trade along China’s ‘One Belt, One Road’ won’t succeed without the currency of trust
Reasons for optimism about the long term
2015
Can big oil go green and win?
Poorer Nations Could Sway Climate Talks
Combating Idleness and Deprivation
How China can be a model of food sustainability for the developing world
Kyoto II – Is it a Done Deal?
A meeting of the two largest economic powers
Why China will experience a 'soft' landing
Beware of superstitions
The Elephant and Dragon move ahead
G-7 target on fossil fuels raises many questions
Why Battle for Net Neutrality in the US Matters Globally
China’s resurgence – the ‘normal new’
Wanted: A managerial culture that embraces cultural differences
China's early education plan a smart investment in the future
The New Normal for China and India
2014
China's infrastructure push offers a sure track to better growth
US-China climate pact a good start, but not quite enough
Rethink the human’s place in the ‘digital revolution’
China springs a carbon surprise
Infrastructure - the invisible hand in full view
Dialogue vital for survival of Iraqi nation
China must nurture a new generation of beautiful minds
Great expectations in China and India
GM Cereals – The Pros and Corns
Time to be Honest about Our Energy Prospects
Weathering the Storm of Climate Change
Making a Big Decision? Beware of Your Biases
West Deserves Better Logistics Infrastructure
Digital Currencies do Represent the Future
From 'Printed' Houses to Wooden Skyscrapers
It’s time to bail out our schools, not our firms
Solution to India’s housing shortage – print new ones!
And the most promising green technologies of 2014 are ...
Transport infrastructure key to domestic, export growth
Oil stopgaps: Not worth risking
2013
Why the US should grant Edward Snowden amnesty
May we be more optimistic!
China headed for another massive social experiment?
A dialogue that worked
Yes, politicians deserve vacations - because we benefit
NPOs, NGOs invaluable as creators of dialogue
Look closer and ask: Is America reinventing itself?
Boston bombings case underlines need for dialogue
Millennium Development Goals or own goals?
As usual it's about balance - and timing - of course
Chinese strategists make right moves for growth
2012
Preparing for tomorrow
Austerity or growth?
Japan in danger of becoming 'just a place to fly over'
Beware of the business cycle?
An inconvenient truth
Limited offer sale: Buy a country
Where did our money go?
Leading from behind - a year of elections is almost over
Driving towards a green future
Waiting for springtime
Preserve or Perish
Startlingly similar Asia policy for Obama, Romney
Globalisation remains an irresistible trend
Google has the edge in smartphone war
U.S. Braces for China's Rise
Mankind’s General Scourge
The summer holidays are over and nothing has changed!
Put the hidden trillions to work
Making sense of India’s woes and wonders
Storm in a teacup!
Let’s give bad bankers a venue to admit their sins
News is about depth, not puff or velocity
Booming India, but too few toilets
Delayed Court decisions doesn't mean one may continue to play 'Great Game'
We need media to reflect on data and offer public a balanced view
Big polluters can lead in forging common purpose
The weighty issue of choosing a leader
EU-India Relations - Facing similar challenges
Educating with a goal
The Judicial Malaise
We are growing out, but not growing up
EU´s retrenchment enigma
Urbulence in the Eurozone and the effect on SMEs
Skolkovo May Help Russia to Diversify
Make things more effective
Tapping into the Commonwealth connection
Innovative models for public finance
Facebook revolution but Indian style
The feel-good factor
Asian investors - a private equity opportunity
India needs to be taller and stronger
China´s low sales volume...
Nations playing leapfrog
Shafts of sunlight
What webs we weave
As performers go to Davos, the circus steals the show
Can we control the politicians?
 
2011
Europe’s reminiscence
China firms should go for win-win in overseas ventures
Of procrastination...
Making sense of profiteering
Truth about financial mess must be laid bare
Small is also beautiful
China can help Europe with debt crisis
Excising the cancer of global corruption
Education, a critical asset
Arab uprisings set in motion forces of creative destruction
A new era of change
We must ensure better education for all
Beijing wary of bankrolling a lost cause
Asean's re-emergence as a local and global leader
Why India's Role in the Global Economy is Still Work in Progress
Its the leadership, stupid!
Reverse globalisation: The new buzzword
China’s moves show it’s banking on the future
By Frank-Jürgen Richter
Global Times, August 31, 2016
 

In 1997 China resumed its sovereignty over Hong Kong after having being administered by the UK for 156 years. But there were stipulations: one was that Hong Kong should retain its capitalistic economic system for a further fifty years as drafted under its Basic Law. This permitted Hong Kong to remain somewhat independent of Beijing under the principle of "one country, two systems." Now, nearly 20 years later, we are seeing many changes as the two draw closer. One notable event is an agreement to link-up the Shenzhen bourse with Hong Kong's. But this is not an entirely novel situation, it almost copies the link between the Shanghai and Hong Kong bourses that was set up two years ago.

The new trading system, like its Shanghai exemplar, will have daily limits for north and southbound trades. But it will permit large capitalization funds to flow, allowing overseas investors to enter the market and possibly reducing the mainland share prices to more reasonable levels.

In recent years, Beijing has been a little worried by the media attention of capital outflows from China. However, in comparison with the billions of outward direct investment (made easier in this new tie-up) only a few million US dollars could be designated as capital outflow; and some of this represents house purchases for expat families who are educating their children abroad.

Meanwhile there are divergent statements about Chinese outbound foreign direct investment (ODI) levels depending if one looks at data from China's Ministry of Commerce or from the Brussels think-tank Breugel. The latter group notes the Asian region is the largest recipient of Chinese ODI at $41 billion, Europe is second at $13.9 billion and North America third at $11.4 billion. The rapid rise in Chinese ODI is due to several factors all contributing to the easing of China's capital account liberalization, but is a little clouded because Hong Kong is classed as "outside" China as a recipient of ODI. Much of that ODI is returned to the Chinese mainland which creates an inflated outward-inward counting - a situation strategists are well-aware of.

A further example of China opening-up is forex trading denominated in yuan in London has grown six-fold in the last four years with average daily volumes exceeding $40 billion. The UK has actively supported broadening the yuan's use, becoming the first Western government to issue yuan-denominated bonds in 2014. That situation was boosted on June 2 when the first ever Chinese sovereign RMB bond was issued outside of China.

Now, the IMF has included the yuan in its basket of Special Drawing Rights, effective October 1. The three-month benchmark yield for China Treasury bonds will serve as the RMB-denominated instrument in the SDR interest rate basket - further supporting the yuan as an international currency.

There are two other notable banking changes. First, the Postal Savings Bank of China (PSB) is closer to an IPO. It has the Hong Kong stock exchange's approval and could become the world's biggest share sale this year, raising about $8 billion. This is an important move since the PSB, which is represented across the whole of China, is an option for people who are excluded from mainstream offers for savings and investments. PSB also provides a remittance network for tens of millions of migrant labourers, letting them send their income from far-flung factories safely back to their families. In March it had 40,057 outlets nationwide, covering 98.9 percent of counties, more than any other bank in China. It also had 505 million retail customers, one for every three citizens. Second, the Hong Kong Monetary Authority has granted approval for its residents to store money in the local version of their online wallets.

Technological change is sweeping through the Chinese financial systems as mobile banking becomes increasingly popular. The payment apps WeChat Pay and Alipay together have at least 500 million users. Most users reside in cities, but it is only a matter of time before the technology spreads further.

When Hong Kong was returned to China it was opined that Shanghai would become China's great financial center, since its business center has long been regarded as the place where East meets West. Many multinational companies, international banks and international lawyers are headquartered in Shanghai; whereas all the major State-owned enterprises and large domestic companies tend to be headquartered in Beijing. Illustrating the long game, Shanghai's government has just released a draft development plan in which they aim for the financial industry to make up about one-fifth of local economic output by 2040.

It is clear that China is carefully revising its financial sector and aligning it with global regulations, governance and transparency. This is courageous given the global slowdown in trade in the past few years, the relative instability of the US, the world's richest nation and the projected withdrawal of the world's fifth largest economic nation, the UK, from the European Union. By creating deeper banking clarity China will better support its entrepreneurs reaching out to world markets as well as help millions of rural people. It will confer a new vitality in China.

The author is founder and chairman of Horasis, a Swiss-based global visions community organization and host of the annual Horasis China Meeting, the world's foremost business meeting on China held outside the world's second-largest economy. bizopinion@globaltimes.com.cn

 

The author is founder and chairman of Horasis, a Swiss-based global visions community organization. bizopinion@globaltimes.com.cn

 


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