18 September 2017

China: More open for business

At a time of growing concern about protectionism and economic nationalism, China is increasingly advocating trade openness, but with this comes great expectations.

Contact us

Customer Service and Technical Support

There is little doubt that China’s further integration into the global economy and the opening of its financial markets are among the most significant opportunities now presented to investors across the globe.

China’s transformation is without parallel in economic history 1 and now the country is reforming 2 and reshaping to become the engine of growth in the 21st Century. 3

“Having called for a new era of global openness, China has therefore raised expectations that it will reform faster,” explained Stuart Gulliver, Group Chief Executive at HSBC at the recent HSBC China & RMB Forum.

“While China remains committed to steady but sustained reform, a combination of currency pressure and external challenges have caused it to slow the pace of change and focus instead on guaranteeing economic stability.”

China posted an enviable growth rate of 6.7 per cent last year 4; the target for 2017 is 6.5 per cent 5 or higher. The country continues to reform, opening its capital account and financial markets to increased foreign investment.6

“We've seen more outreach to global investors, more openness and greater willingness to share information, and that's very useful for the investor community and we hope to see more of that,” expresses Steven Watson, Chairman, China Group, Capital Group. “There's also a greater focus on transparency, there's greater focus on good principles of corporate governance and that helps to make a healthy stock market.”

Markets to play crucial role

Beijing has promised to open up even further. Recently foreign investors were given freer access to the world’s third biggest bond market. 7 This comes after the International Monetary Fund admitted the Yuan into its basket of reserve currencies. 8

“China genuinely wants the markets to play a more important role in capital allocation and it helps the government politically and internally to drive and support some of the reforms that they know need to happen, particularly with state-owned enterprises,” expresses Michael Falcon, CEO, Global Investment Management Asia Pacific at J.P. Morgan. “It is about using the power of markets to drive some of the reforms that they know need to take place over the next 20 to 30 years.”

With China now such a significant economic player globally, financial institutions are increasingly positioning themselves to take investors onshore. 7 “As its financial markets become more open, they're becoming much more integrated too. You've got China growing at a fast pace, investors and now thinking, how long can I afford to not be exposed to this economy,” explains Bill Maldonado, Chief Investment Officer at Equities HSBC Asset Management.

References

1. China's Global Rise Brookings Institution
2. Premier Li: Unleash productivity through reforms Xinhua
3. China in 2017: anchor of stability, engine of world growth The State Council, PRC
4. China Ends Year of Stabilization on High Bloomberg
5. China Sets Growth Target of About 6.5% Bloomberg
6. China allows more foreign investment in onshore financial market Xinhua
7. China's $9 Trillion Bond Market Lures Neuberger, Fidelity Bloomberg
8. IMF Adds Chinese Renminbi to Special Drawing Rights Basket IMF

Disclaimer

This document was prepared by The Hongkong and Shanghai Banking Corporation Limited, Hong Kong Branch (“HSBC” or “we”).

The document is intended for those who access it from within Singapore. The document is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.

The information contained in this document is derived from sources we believe to be reliable but which we have not independently verified. HSBC makes no representation or warranty (express or implied) of any nature nor is any responsibility of any kind accepted with respect to the completeness or accuracy of any information, projection, representation or warranty (expressed or implied) in, or omission from, this document. No liability is accepted whatsoever for any direct, indirect or consequential loss (whether arising in contract, tort or otherwise) arising from the use of or reliance on this document or any information contained herein by the recipient or any third party. Future changes in law, rules, regulations etc. could affect the information in this document but HSBC is under no obligation to keep this information current or to update it. Expressions of opinion if any are subject to change without notice. If you seek to rely in any way whatsoever upon any content contained in this document, you do so at your own risk.

This document does not constitute an offer or solicitation for, or advice that you should enter into or start using, any of HSBC’s products and services. Recipients should not rely on this document in making any decisions and they should make their own independent appraisal of and investigations into the information described in this document. No consideration has been given to the particular business objectives, financial situation or particular needs of any recipient. Any examples given are for the purposes of illustration only.

No part of this document may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC.

Copyright © The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch 2017. All rights reserved.

You are leaving the HSBC Commercial Banking website.

Please be aware that the external site policies will differ from our website terms and conditions and privacy policy. The next site will open in a new browser window or tab.

You are leaving the HSBC CMB website.

Please be aware that the external site policies will differ from our website terms and conditions and privacy policy. The next site will open in a new browser window or tab.