The most obvious one-word answer to the question why did China boom is capitalism. As Peking University economist Michael Pettis puts it, China boomed simply because the government got rid of "idiotic policies" rooted in Stalinist and Maoist economics, letting the market do its magic. Indigenous market energy attracted diaspora, East Asian, and eventually global capital investment, allowing Chinese products to reach markets worldwide. The Behemoth was born. But questions remain as to the nature of China's economic model, as opinions range from skeptical to triumphalist. Capitalism is at the essence of the boom-- but what kind of capitalism? And where will it lead?
Francis Leung has worked as an investment banker in Hong Kong for nearly thirty years. He has been dubbed "father of red chips" for leading the effort to get the first Chinese companies listed on the Hong Kong stock market, and managing the first initial public offering of a Chinese company on the Hong Kong stock market. He has worked closely with Hong Kong tycoon, Li Ka-shing, was Asia chairman for Citigroup Global Markets and is a senior adviser to CVC Capital Partners.
I think one of the reasons why we have seen such an economic miracle happen in China in the last 30 years is the open-mindedness of the Chinese government. The Chinese government, first of all, set up the stock exchange when it discovered that its domestic stock exchange not really work. They allowed all their companies to go international, to learn about the international experience and use international standards to upgrade their standards, to upgrade the management system, the corporate governance, and so on. I think, actually, that helped the reforms and the progress of the state-owned enterprises as well. And the overseas listings not only allowed Chinese companies to get access to international capital, I think the experience also helped the reform of the Chinese sector, the state-owned enterprises and many industries as well. I think that is important. And then, I think another reason why the Chinese economic reforms were successful compared to many, many other emerging markets was the role Hong Kong has played. I think that is very important in two aspects: Capital, human capital as well as monetary capital. Hong Kong helped Chinese companies raise billions and billions of dollars to help the economic reforms in China and bring the money back to China in many sectors. And human capital is very important as well. Like ourselves in the investment banking industry, we provide services to Chinese companies and help them to raise capital and help them improve their management system and teach them about the importance of corporate governance. I think this is very important to the development of the Chinese companies. And also, many Hong Kong entrepreneurs have moved their operations, their companies into China and they employ millions of workers in China. As I told you earlier, the first phase of the China experience, or the China concept, was the movement of Hong Kong companies into China. This Hong Kong money and expertise actually has helped, in particular, the development of the Pearl River Delta. I think overseas Chinese, in particular Hong Kong Chinese, have played a very important role in the modernization and in the reforms of China.
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