“China’s financial market has high growth potential, and it will bring new opportunities to Korea,” according to Ou-Yang Hui, Professor of Finance at Cheung Kong Graduate School of Business. While speaking at the 2013 Seoul Asia Financial Forum on May 27, 2013 Professor Ou-Yang emphasized that China’s potential in the financial markets will also provide opportunities for Korean investors. And due to an international increase in the value of the Chinese Renembi, and an upsurge of confidence in the stock market, China will emerge as the new core of Asia’s financial market.
“Although until now the growth of financial markets was not able to catch up to the fast growth of China’s economy, if the government’s financial market reformation invigorates the market, it will provide a foundation for becoming the center of international finance.”
Professor Ou-Yang explained that although China’s GDP last year held up to 10% of the world’s GDP and the growth rate was also higher than the world average, the progression of stocks, bond, futures, and derivatives was relatively slow. He also explained that "although the government’s strict regulations have prevented financial market innovations from occurring, from now on economic booms must be sought through the growth of financial markets.”
According to Professor Ou-Yang, domestic consumption and investment invigorates economies through actions such as increasing loans and decreasing deposit interest rates. He foresees such economic stimulation and growth can lead to financial growth. This means that financial markets could grow further based on the real economy.
“Before a country’s financial market growth, GDP per capita should develop to a higher level” said Professor Ou-Yang. “After that, people will make enough deposits for investment and seek for more delicate financial products.”
He also emphasized the possibility of having an international financial center in China. By looking at such cases as London and New York, if growth of financial markets is added to the current economic growth of China, it will soon become the center of the international financial market. Various global financial institutions are concentrated in international financial centers, allowing for a vast number of transactions in one place, and this could become a basis for China’s economy to grow one step further.
“There are potential problems, but since China and Korea are the best trade partners, China’s financial market will provide opportunities for Korean investors” he said. “The pattern of successful economic growth in China for the last 30 years cannot be repeated, therefore the financial market, especially the bond market must be developed” he emphasized.