Last week CoreData was in down town Shanghai for the second time in a month speaking at the Investment Operations & Custody Asia Pacific conference on the topic of Growth in Asia Ex-China.
Burningpants has been operating in China under the business name Dragon Data for the past decade and in that time it has been pretty easy to get blasé about the ridiculous numbers that come with having a population of 1.36 billion people – not counting the 260 odd million which the Government describes as “migratory” and not subject to census.
Even as immune to these numbers as one can get, it was the presentation by Zheng Cao from the Bank of China which literally rocked me back in my seat.
It wasn’t that the Chinese Government wanted to shift the financial hub from Hong Kong to Shanghai and do that by 2015 (ensuring parity between the HK dollar and the Renminbi, thus freeing up 17 trillion in savings); it wasn’t that they had started two regulatory models ( the Shanghai Model and the Macau Model) in a two horse race to see which one came first; it wasn’t that he steadfastly referred to Hong Kong as Macau all the way through; it was the fact that he said last year the Chinese Government had signed off on 280,000 new financial products.
Look, when Australian politicians or bankers give me a number I routinely discount it by about 50% because there is always an agenda at work and unless you understand the agenda, it’s improper to suggest you understand the numbers being quoted. However, in the past 10 years the Chinese Government has tended to be remarkably slow but remarkably straight forward.
If these numbers are correct, and assuming that the Chinese like us work about 200 days a year and eight hours a day, that’s the Government signing off on a new product every 20 seconds.
Like most people in financial services I’ve been involved in the genesis of a lot of financial services products, some good, some bad…and I know the effort involved and the number of people required to make it happen and when you multiply that by 280,000 that’s a truly staggering thought.
As an aside, Zheng said that China will start its investment liberalisation program in 2015. That will probably mean international investment – which means Chinese investors will be able to do more than buy Chinese Bank Bonds and real estate, which is great news.
What’s no so great news is that they expect a minimum return of 15% on anything they invest in outside of China.