October 18, 2004 Is it a good time to do business with Asia? David Eldon, chairman, Hongkong Shanghai Banking Corporation, thinks so. After all, China has become the workshop of the world, recently overtaking Japan as the second largest producer of electronics and IT hardware. India is known worldwide as the optimal destination for software development and service outsourcing, and Japan is experiencing a powerful economic awakening of its own.
On the subject of China's currency, Eldon said that patience was required on behalf of the Chinese and resistance to external pressure to float their currency on the world market. "There are those who maintain that the right time is now," said Eldon, citing the International Monetary Fund (IMF), which presently believes conditions are "near ideal" to liberalize its currency. However, Eldon believes it's in no-one's best interest for China to release its currency before its economy is ready economically, structurally and socially. And if anyone should know, it's Eldon, whose bank recently acquired a 19.9 per cent stake in China's fifth largest bank, Bank of Communications. Eldon also touched on the emergence of China and India as economic superpowers in the global market, mentioning that both countries were slated for high prosperity growth over the next 25 years.
"There seems to be a growing fascination with the China versus India question recently," said Eldon about a misnomer that there must be a winner and a loser between these two countries. "The reality is that there is no finish line-no real race." The real issue is that China and India are not competing so much as viewing each other as trading partners. In fact, trade is up between the two countries from $300 million in 1994 to over $10 billion today.
And despite forecasts for reduced economic growth in 2005 versus 2004, Eldon was still bullish on the region. "Asia is once again at the beginning of another long cycle of growth," he said, crediting China's growth story, Japan's economic awakening and adjustments that have been taking place since the Asian financial crisis of 1997. Eldon concluded by saying that most business people he spoke with weren't concerned with whether a particular economy's GDP was forecasted to be a half per cent higher or lower in the next 12 months. Instead, they wanted to know about the underlying business environment: for instance, do Asian economies have growth-oriented policies? Are they making progress in terms of opening up? And most importantly, are there opportunities to make money? Said Eldon, "For many economies in Asia, including some very large ones, the answer, on all three counts, is a resounding yes." This content was provided courtesy of the Vancouver Board of Trade. To read more related articles, go to www.boardoftrade.com.
