by Peter Wong, Chairman, IACCT (China)
China entered the ‘brave new world’ in 2001 when it became the latest member of the World Trade Organization (WTO). State-owned banks at the time were saddled with non-performing loans. Foreign exchange reserves were at a modest US$200bn level. Standard & Poor’s then assigned a BBB sovereign credit rating to China.
A decade later, China became the world’s second largest economy with the most sizeable foreign exchange reserves (US$3.2tr as of August 2011). All the Big Four state-owned banks are listed with CAR above the 11.5% minimum set by the domestic regulator. ICBC ranks No.1 among banks globally and has set its goal to achieve 10% of global business by 2016. Standard & Poor’s have assigned a double-A-minus rating on China.
Towards a market economy
China is in dynamic mode and change is constant. As it moves from a state-controlled central planning to a market-based economy, policy tools are gradually moving towards fine-tuning rather than achieving specific quantifiable goals. China continues to experiment, to innovate, to invest and to adjust. The expectation is changing for the better.
With a per capita income of less than US$10,000, China is going through a process of metamorphosis – shifting its future focus from quantity to quality of growth (in areas including environment protection, low carbon, improved income equality, social mobility, a social security safety-net, medical and retirement issues), development of the private sector, a more balanced export and domestic sector and resolving the issues arising from rapid urbanisation. There is ample room for commercially viable technology and knowledge transfer.