Amid concerns of ballooning debt, capital outflows and uncertainty about the impact of the Brexit on the global economy, participants at the Annual Meeting of the New Champions 2016 in Tianjin are optimistic about China’s economic prospects – especially in the financial technology sphere.
“China has a thriving ecosystem in terms of innovation, second to Silicon Valley perhaps. There are many people with a global mindset and a lot of entrepreneurial talent,” said Mio Takaoka, Managing Director, Monex Ventures; Executive Director, New Business Planning Office, Monex Group, Japan.
While there are global concerns about a potential economic slowdown in China, Takaoka said there is a tendency to look first at the risks instead of the opportunities. “Looking from the outside, I believe there are a lot of positives,” she said, “I believe China is in a relatively advantageous position in terms of promoting innovation in finance.”
Over the past five years, 5,000 new financial technology companies have entered the market, creating strong momentum towards private enterprise and a new, potentially more sustainable business model to directly support the private economy.
“The future of financial technology is transformative. In the future, more capital could be invested in non-government companies and this kind of transformation will make the real economy in China stronger,” noted Gregory D. Gibb, Co-Chairman and Chief Executive Officer, Shanghai Lujiazui International Financial Asset Exchange Co. (Lufax), People's Republic of China.
However, China’s mounting debt is becoming a problem that cannot be ignored, countered Yang Yanqing, Deputy Editor-in-Chief, China Business News, People's Republic of China. “A lot of financial organizations have argued that debt has reached 250% of GDP, and that 180% of that is from corporate debt,” she said.
The proliferation of cheap credit to stimulate growth has seen China’s debt soar, although it still lags behind the United States, which has a debt-to-GDP ratio of 331%. “We have several billion in debt in stocks so we need to push forward with reform, and the bond market should be pushed to a new high priority,” argued Jia Kang, President, China Academy of New Supply-Side Economics, People's Republic of China. “The overall planning is global deleveraging,” he added.
To boost economic growth in the short term, the government will need to step in and rebalance, arguedHuang Yiping, Professor, National School of Development, Peking University, People's Republic of China.
“If the government wants to stabilize debt, the central government has to take some responsibility,” he said. Huang also called for wider restructuring – including the privatization of state-owned companies – to be accelerated, although he did acknowledge that it “won’t happen overnight”.
Speaking from an insurance perspective, Zhou Yanli, Vice-Chairman, China Insurance Regulatory Commission, People's Republic of China, said a proper identification of the risks is required. “We want to avoid risks and also cushion the blows,” he said, “Quantify them and showcase to the general public that we can be practical, progressive and targeted, and also provide a good foundation at the macroeconomic level.”
The World Economic Forum’s 10th Annual Meeting of the New Champions is taking place on 26-28 June in Tianjin, People’s Republic of China. Convening under the theme, The Fourth Industrial Revolution and Its Transformational Impact, more than1,700 business leaders, policy-makers and experts from over 90 countries will participate and explore more than 200 sessions over the three days of the meeting.
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World Economic Forum: Despite Stresses, Strong Outlook On Chinaâs Financial Technology Sphere
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