CDF Talk: HSBC advocates for more connectivity in financial system
Updated 22:54, 09-Sep-2019
CGTN's Global Business

China is making the market open-up to a top global campaign. Yet, it is a gradual approach and the scope of business for international investors still has room to grow, especially in the financial sector.

HSBC — which takes its name from Hong Kong and Shanghai and has large presence in China's financial sector — thinks financial opening-up is encouraging, and advocates for more connectivity, according to David Liao, the president & CEO of HSBC Bank (China) Company Limited.

"It is important that if the economy isn't closing up and it's opening up, then the financial system also has to open up into international standards," Liao told CGTN at the sideline of China Development Forum (CDF) Special Session held in Beijing over the weekend.

David Liao (L), the president & CEO of HSBC Bank (China) Company Limited, speaks with CGTN's Cheng Lei in Beijing. /CGTN Photo

David Liao (L), the president & CEO of HSBC Bank (China) Company Limited, speaks with CGTN's Cheng Lei in Beijing. /CGTN Photo

Liao on China's financial sector

China has been opening up its financial markets with a slew of measures released this year. China's central bank stated earlier this year that as the country enters a new era of development, further opening up its financial sector is a path the country must follow to integrate into the global economy.

Liao gave credit to China's efforts in terms of opening up the capital markets and the channels for foreign institutions to invest in China. The CEO also appreciated efficiency of existing financial system, which allows directives to "go through in a much more streamlined manner."

"We are looking at our various JVs and securities, insurance and asset management, in terms of having a bigger component on participation. We also have some good partner. The connect channels are great," Liao said.

Given that China's economy is shifting from quantity into quality, Liao considered that financial system and market players should "not separately focus on a broad quantity, but on the qualitative part of the growth."

"The engine is humming. It's important that the financial system continues to be able to serve in size, to be able to serve as the support and lubricant of the real economy," he told CGTN.

Meanwhile, Liao emphasized on the significance of liquidity, transparency, and good governance when it comes to further internationalize the financial sector.

"The ultimate goal of China’s opening-up is to allow China to be the best in class in terms of providing a global financial platform. So that all forms of assets can trade flourish here with liquidity, transparency and good governance," the CEO explained.

Moreover, he argued that besides top-down regulation and encouragement, a virtuous financial system asks for "lawmaking to complement."

"We spoke about the bankruptcy law. We spoke about derivative markets, which require things like netting a mechanism in order to be much more efficient on capital usage, encouraging more emoluments. We need to start that holistic environment and cannot just leave and order all the working pressure to the regulators," Liao commented.

Liao on company's strategy

China has been at the major part of HSBC's plan for global growth since 2015. Like it did for the past 150 years, the bank will have "the same conviction and commitment to continue to invest more in China," said Liao's.

Hong Kong landscape. /VCG Photo

Hong Kong landscape. /VCG Photo

"It is a phenomenal market to be in. And I think there's a lot of financial institutions like ourselves to help build the best practice in China as well as connecting to the rest of the world," he observed.

From Liao's perspective, their strategies have "uncanny kind of parallel moment to China's initiatives.'

He gave examples. "We launched powers over Delta Initiative. [The branch in] the Greater Bay Area was also launched. When we were focusing on the outbound and China launched the Belt and Road Initiatives, arguably given that we were born here,we were one of the earliest Chinese institutions to go outbound."

The bank is also keen on the renminbi (RMB) internationalization. And the CEO highlighted Hong Kong's role in that process. "Hong Kong is where we are able to use our strength to help the currency to better represent the size of the economy that China has on its role as in the international community," he said.

Liao on China Development Forum

China Development Forum, which was held once a year, since 2018 is a biannual event. Liao thought the change of frequency is one of "the best ideas."

"As market and the whole social political economic environment are evolving faster and faster, it really requires this fantastic, international and Chinese community to get together, with the best brains to really get together and find unison of voices to push the new direction for China and the global community," he addressed.

Liao remarked the word of "trust," which was repeatedly heard at the forum. From his point of view, trust resonates strongly with the financial system, and credit – a form of trust – is the core of banking services.

Moreover, the president hopes that "we have to trust of the Chinese community as we come to serve the community." He considered that "it's important that there is trust and growth together."

"It's come to stage the other word is to grow deeper. The relationship needs to be deeper than ever. It's not just about investment. It's about giving, about growing together," Liao told CGTN.