Reports claiming the end of growth in China are greatly exaggerated, according to two CKGSB professors. The potential of an advanced domestic financial sector mean that China's best days still lie ahead.
With China’s financial sector poised for take off, China’s best days are ahead for investors and businesses alike, according to two Cheung Kong Graduate School of Business professors at the 2015 CKGSB Global Forum New York Investment Forum at Columbia Business School.
“The Rise of China – Challenges and Opportunities” was the first annual overseas forum to be hosted by the CKGSB MBA program.
Dean’s Distinguished Chair Professor of Finance and Associate Dean for CKGSB’s MBA Program Dr. Li Haitao lectured on “China’s New Normal,” while Professor of Finance, Finance Department Chair and Academic Director of CKGSB’s Finance MBA Dr. Henry Cao led a panel discussion on China’s emerging investment trend, financial reform and start-up business opportunities.
Some highlights from the discussions:
Applying Lessons from the US
It is an exciting time for China’s finance market, according to Dr. Cao.
“The Chinese financial market has gone through many reforms and opened up lots of opportunities: in the hedge fund industry, in internet finance, in banking, in securitization, so now there will be a high number of job opportunities in finance,” Dr. Cao said.
CKGSB Professor of Finance, Finance Department Chair and Academic Director of CKGSB’s Finance MBA Dr. Henry Cao (far right) leads a panel discussion on China’s emerging investment trend, financial reform and start-up business opportunities at the 2015 CKGSB Global Forum New York Investment Forum at Columbia Business School.
Students from China are coming to the US to study both the good and bad practices of Wall Street so they can take that knowledge back to China and help shape the nation’s blossoming financial sector, Dr. Cao said.
“Securitization has gotten a bad name in the United States,” said Dr. Cao, who holds a Ph.D. in finance from the University of California at Los Angeles and a Ph.D. in pathology from Yale University. But the Chinese can think critically about the risks involved and the lessons learned from the US as the country goes through the process of reintroducing securitization.
In the end, Dr. Cao said, this exchange of information will create a win-win situation for the economies of the US and China.
China’s Best Days Are Ahead
In sharing his view of “China’s New Normal,” Dr. Li said that as China’s economic growth has dropped out of the double digits and settled at around seven percent, he has been hearing a common refrain from many in China: “The best days of China are over. The export-driven model is over. Look at all of the problems: the pollution, the traffic, the corruption.”
CKGSB Dean’s Distinguished Chair Professor of Finance and Associate Dean for CKGSB’s MBA Program Dr. Li Haitao shares his optimistic view of “China’s New Normal” at the 2015 CKGSB Global Forum New York Investment Forum at Columbia Business School.
That thinking is shortsighted, Dr. Li said, and does not consider a crucial factor: China’s return to its traditional place in the world economy. In charting China’s percentage of the world GDP since 1 A.D., there is a distinct U-shape from which China is coming out on the right side.
Thus, in Dr. Li’s view, “The best days of China are yet to come.”
Dr. Li, who holds a Ph.D. in Finance from Yale University, believes that China is motivated to make the necessary changes to address the problems that have come with the country’s sharp economic rise since 1978.
He pointed to three government commitments in November 2013 that will set the course for the country’s future: 1) letting the market play a decisive role; 2) protecting and treating private property like public property; and 3) focusing the government on providing services.
He also discussed key elements for a new model of economic growth, including helping China absorb overcapacity by expanding infrastructure investments overseas to neighboring countries such as India and Indonesia.
“If the elephant and the dragon get married, imagine the potential,” Dr. Li said.
He also stressed the role of the Internet and new digital enterprises to China’s continued growth. “If you think Silicon Valley is the hottest place for startups, you should come to Beijing,” Dr. Li said.
Finance is the biggest area for growth, however, because “in China, every aspect of finance is reforming,” Dr. Li said.
“The most exciting place to be on Earth right now is China,” Dr. Li said.
EXECUTIVE EDUCATION
CKGSB and Columbia Business School have partnered to offer a three-day executive education course on “Doing Business with a Changing China.” As China rapidly evolves and primes its markets to develop into a world superpower, senior business leaders must also develop the knowledge, skills, and behaviors required to succeed in those markets. As a participant in this program, you will be able to immediately apply your learning during facilitated interactions with C-level Chinese executives attending a parallel program, who will be primed to meet US counterparts.
