Quote:
Originally Posted by Shawn
I don't necessarily see this happening, at least not in the near or midterm.
Sure, Shanghai may become more the center of the Greater China finance, but not all of APAC. Lots of reasons for this, but a few of the biggest are:
- No one trusts the PRC's ability (or desire, for that matter) to properly legislate, regulate, and facilitate financial markets. Especially when the PRC has massive vested interests in state-owned financial institutions competing against foreign institutions - we all know who will receive preferential treatment. There is even less transparency and accountability in China than in East Asia on average.
- There are no true Chinese financial national champions who compete globally, and for the above reasons there aren't likely to be any soon.
- The few bright spots for Chinese brands - namely new media companies like Weibo and Alibaba - launch their IPOs in NYC, not even HK . . . because that's where the transparency is and where non-Chinese are comfortable investing.
- It may be improving, but China will never have the English-speaking population tiny Singapore has all in one place, nor will it ever have a legal system built on British Common Law (like Singapore).
- There is just no way other large APAC economies will allow the PRC to dominate Finance regionally. I deal with this all the time - both Japanese corporate and government leadership vastly prefer Singapore to remain the defacto APAC financial capital over anywhere in mainland China. I cannot stress enough just how much non-Chinese business and political leaders in the region do not like China.
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Shawn, I'm not attempting to elide the very real issues that plague the APAC region. My point is that historically, a region's financial capital is wherever the regional hegemon's financial capital is.
I don't disagree that there is a lot of stuff the region still has to work out, and that the smaller nations all distrust the PRC (and for good reason), that the laws and regulations aren't there yet; neither are major Chinese financial firms, and so on. Indeed, I don't see it happening anytime in the near- or medium-term either.
I'd also argue, however, that China
cannot be a hegemon unless it controls the region's financial capital (i.e. the flow of money itself). So in that sense for China to
be a hegemon, it would need to control, well, the financial capital (now, the convergence of capital flows). And to do that it would have to solve its very real financial issues. Until then it can be a bully, exerting military might, but the APAC region's financial capital will be too decentralized to really have a single point of control.