Opportunity lies with mainland Chinese firms, says economist
A VISITING economist has urged Jersey’s finance industry to seize the opportunities within China, but to find mainland partners rather than using Hong Kong and Singapore companies. Jinny Yan, chief China economist for ICBC Standard Bank, was in the Island as part of the bank’s Investment Seminar Series.
The audience heard that despite fears that China’s economy was slowing, it was stabilising and still provided plenty of new opportunities, with investors looking outwards to either expand their businesses or realise potential with wealth management.
Miss Yan said: ‘I believe, for international financial centres like Jersey, because you offer the financial services and professional services that China domestically currently lacks – so whether it’s legal services, financing type of services, trust companies, wealth managers, accountants – I think there’s a niche to be explored here because Chinese partners are increasingly looking internationally for those who can hand-hold them through that maturity process.’
However, Miss Yan warned Jersey financial firms to seek out partners in mainland China: ‘Jersey companies tend to work with Hong Kong and Singapore, and obviously it’s been easier. Number one is obviously language difficulties. Number two is governance. Hong Kong and Singapore have been obviously internationalised for a very long time, they themselves are international financial centres.
‘Let’s not forget, they are also going to be your competitors in the future. If Jersey were able to work with mainland partners, and there are plenty out there who are already internationalised, some of the Chinese banks, perhaps also other China-based business professional services that already have a Chinese operation, for example, could also be another connecting point for Jersey companies to work with China.
‘In the future, I do hope that companies can establish more connections with mainland China – not necessarily via Hong Kong and Singapore.’
Miss Yan also talked about the need to help finance the massive infrastructure investment taking place in China, particularly as part of the ‘Belt and Road’ programme, which is the country’s global initiative to drive around $8 trillion worth of infrastructure projects. While Jersey is not in the business of constructing these, it can help with the financing.
Miss Yan said so far around $750 billion of financing had taken place: ‘For international financial centres, such as Jersey, you will be financing it, helping be part of that professional-services community that manage these projects and help to ensure that these projects are both well managed, but also that it’s sustainable, that it has other potential to fulfill such as green growth, renewable energy, etc.’
There are also changes taking place in China’s population, said Miss Yan: ‘China’s working-age population has already peaked, and the problem with that is, number one, productivity levels will go down. So this is one of the reasons why artificial intelligence technology is so important, because that will now start to drive productivity growth in China.
‘For China, it is a big challenge because obviously you need a lot of resources to work with the ageing population – whether it’s in the form of health care, or insurance and pensions – but at the same time it’s a huge opportunity for the pension, insurance, asset management sectors. I think because in China, those health and wealth and happiness-type of industries are not fully established, there’s governance issues etc – that’s why global partners, international partners from the west, will be very, very important for China to really engage with over that demographic issue.’