China and India remain high on the financial and banking agenda, with attendees at SWIFT’s Sibos 2010 conference packing the room for a session called “India and China: How Do You Choose?” The rise of China especially, in both currency and trade, played as a theme through Sibos, the annual financial and banking conference held in Amsterdam this October.
Many U.S. and Europeans are not aware of how significant both countries and their rapidly growing economies are, said Gerard Lyons, chief economist and group head of research, Standard Chartered Bank. China is looking to move into emerging markets and plans to do the kind of business development that corporations in the United States and Western Europe generally consider their purview.
That means developing and marketing new products as well as providing inexpensive manufacturing facilities for other companies. As Lyons explained the Chinese expansion imperative, “You can’t rely on selling cheap goods to Westerners up to their eyeballs in debt.”
Chinese banks are planning to expand and were exhibiting with the best of them at Sibos 2010. The Bank of China plans to open a few branches in Europe next year. “We are going global,” said Hong Zhong, Director, strategic development, Bank of China.
For their part, the Indian panelists acknowledged that they and their banks are busy on their home turf, which is difficult for U.S. and European banks to enter. The Central Bank of India now has more than 28 million retail customers across 5,400 branches, with 57% growth in the small and medium business sector last year, said S. Sridhar, the bank’s chairman and managing director.
“In our growth strategy for the bank, the domestic economy plays a huge role,” said Om Prakash Bhatt, chairman of both the Indian Banks’ Association and the State Bank of India, in a Sibos session focused on the regulatory environment. Indian banks will go abroad as their customer do business abroad, and they will need to restructure in order to meet the needs of international corporations.
Session moderator Emmanuel Daniel, CEO and founder of The Asian Banker asked the Indian panelists about another serious issue: the income disparity between the rich and the poor, with little acknowledgement of the problem. “The inability of India to distill its wealth throughout its economy remains a problem,” Daniel said, “and its capacity to address this issue remains to be seen.”
The growth of both emerging and established industrial economies in Asia may depend on it.
Indeed, one Japanese attendee suggested that the so-called “lost decade” in Japan—a reference to low growth, high debt, and deflation after the country’s real estate bubble burst in the 1990s—may become a lost 20 years. He hoped it would not be a beacon of things to come for the United States economy, as Japan’s quality-based manufacturing techniques were in the 1980s.
The Japanese appear to be looking toward increased trade within Asia for growth. “Intra-regional trade is mainly intermediary goods,” said Shinichi Hayashida, director and deputy head of the international banking unit at Sumitomo Mitsui Banking Corporation. Increasing income and consumption within the rising Asian economies would be a welcome change.