UNLESS witnessed first-hand, it is difficult to grasp the sheer scale of economic growth in China or the level of international investment that has continued unabated despite the recent financial crisis.
As a member of the Shanghai International Advisory Council – whose annual meeting I attended last week – I have been left in no doubt that China is determined to create a financial services industry that reflects its global standing.
On the surface, it may seem counter-intuitive that the policy chairman at the City of London is advising a rival financial centre on how to improve its business offer.
But whilst we are all competing for business, we are not dealing with an either/or situation – firms want to have a significant presence in London and New York and in the Asian markets.
China’s inevitable growth will help sustain the expansion of the global financial and professional services industries – ultimately creating a bigger pie for us all.
It is thus in all our interests to help China develop its financial services industry – by fostering closer cooperation, we can help to ensure the City’s position as a leading global financial centre for years to come.
It is also in all of our interests to ensure that major financial centres are underpinned by a commitment to openness, predictability and stability.
In recent years, Chinese policy-makers have demonstrated a keen understanding of the important role infrastructure – be it transport, technology or office space – plays in creating a world-leading financial centre and a huge amount of money has been spent in an attempt to attract leading firms to mainland China.
But significant barriers to progress remain. One of the major concerns is that until the renminbi has been fully internationalised, the Chinese financial services industry will never be able to fulfil its potential.
Although at present this remains a huge and complex long-term undertaking, London could have a vital role to play. With one third of global forex trading taking place in the City – a greater share than any other financial centre – London is a natural home for any such activity and will be at the forefront of any future market growth.
Many international firms still feel they face huge constraints when doing business in China, not least with regards to a lack of consistency and transparency when it comes to bureaucracy, regulation, licensing and competition. A lack of personal freedom also makes it difficult to recruit top employees to work in these markets.
However, there is no doubt that China will only become more important as a place to do business and this is something to be encouraged. A strong China will only serve to improve the industry as a whole.
Stuart Fraser is policy chairman of the City of London Corporation