Standard Chartered Bank's top official in China said yesterday that the time was right for local banks to get into the vast market across the Strait.
"It's never too late [for Taiwan's banking industry] to go to China -- the market is simply too large," said Stanley Wong (
And judging from the performance of China's economy, it's not hard to see the reason why.
Taiwan's economic growth rate this year is likely to be around negative 1 percent.
Meanwhile, China's growth rate is forecast to be between 7 percent and 8 percent, according to Kwok Chuen-kwok (郭國全), Standard Chartered Bank's chief economist.
"China's compound economic growth rate of 8 percent is likely to continue into the next decade," Kwok said.
Kwok made the comment in a press conference held by the bank yesterday.
Kwok sought to counter concerns that continued Taiwanese investments in China would hollow out Taiwan's economy.
"Over the last decade, US industry has been moving its production to Asia. It has been proven that the US economy did not hollow out. Another good example is Hong Kong's industry which has been moving their operations to China.
"Twenty years later, the Hong Kong economy is even stronger than two decades ago. Most Hong Kong companies have their head office in Hong Kong and most of the staff are highly skilled management, while production has been moved to China. The trend is described as a knowledge-based economy," Kwok said.
He also said that Taipei will not be replaced by any Chinese city anytime soon.
"With China's strong growth, Taiwan and Hong Kong will still have their place [in the world economy]. It's unlikely that Shanghai would be able to completely replace the current function of Taipei or Hong Kong," Kwok said.
But, he added, "The integration of Taiwan and China's economy is unavoidable."
There are about 10 Taiwanese banks currently applying to Chinese authorities to set up representative offices across the Strait. According to China's regulations, a foreign bank's representative office could be upgraded to a branch office after two years.
Taiwanese may be the first to line up at branch lobbies.
"Although there are still some problems between Taiwan and China [regarding the bank-branch issue], I believe they can be solved. About a million Taiwanese have already moved to China. They will become the primary customer base for Taiwan's banking industry in China -- both corporate and retail," Wong said.
"The growth potential in China is amazing. The total output of China in 1990 was US$400 billion. Last year it was US$1.1 trillion. We expect it to reach US$2.8 trillion by 2010," Wong said.
Of the 191 foreign banks operating in China, their share of China's banking market is only 2 percent, he said.
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