Financial crisis has left China stronger, says HSBC head

Financial crisis has left China stronger, says HSBC head

The chief executive of HSBC in China has said the financial crisis has only made the country stronger, with its exporters becoming leaner and more efficient.

By Malcolm Moore and Adrian Michaels in Shanghai
Published: 7:30PM BST 30 May 2010

"As demand comes back, people are going to find that China has a better and more efficient export machine," said Richard Yorke, who has presided over a dramatic expansion plan for the bank on the mainland since 2005.

The Government's decision to pour an additional 7 trillion yuan (£70bn) of new bank loans into the economy last year, coupled with 4 trillion yuan of stimulus cash, allowed China's exporters to invest in new plants, many of them inland where costs are lower. The stimulus cash also paved the way for vast improvements to China's road, rail and port infrastructure, further cutting costs.

Mr Yorke said China's exports were poised to bounce back so strongly that the country could take an appreciation of the renminbi in its stride. "The currency can go up because costs have gone down.

Manufacturing inland means low or no housing costs and lower wages."

Chinese policymakers have remained cautious about the outlook for exporters, especially given the concerns over the eurozone, which is still China's biggest foreign market, accounting for 25pc of overall exports once the shipping routes through Hong Kong are factored in.

In March, China ran a $7.2bn (£4.9bn) trade deficit, although this was mostly due to the timing of the Chinese New Year holiday on factories and reversed to a $1.7bn surplus again in April. Mr Yorke said HSBC was continuing to build its China business, 70pc of which is presently made up of offering banking services to foreign multinational companies. However, he said that the mix of loans that HSBC is offering is shifting away from manufacturers and towards retailers, property developers and companies selling consumer goods as China moves into the next phase of its development.

He confirmed that HSBC is now looking for a joint venture with a Chinese partner that will allow it to trade securities. As Shanghai moves to become a major financial centre, Mr Yorke said the government would "continue to deregulate" the financial system "but sensibly". "The country is managed extremely well and has a very competent central bank," he said.

He also took a swing at the various Western banks, including Royal Bank of Scotland, which have sold down their stakes in Chinese financial institutions. "You cannot change your China strategy every quarter," he said.


http://www.telegraph.co.uk/finance/financetopics/recession/china-economic-slowdown/7786913/Financial-crisis-has-left-China-stronger-says-HSBC-head.html