China and India or …

So, after a nice lunch, it’s into the session all about Asia, chaired by my mate Emmanuel Daniel of the Asian Banker, who was joined by panellists:

• N Chandrasekaran, CEO & MD, Tata Consultancy Services
• Dr Gerard Lyons, Chief Economist and Group Head of Global Research, Standard Chartered Bank
• Patel Rajnikant, CEO, Reliance Exchange Next
• Srinivasan Sridhar, Chairman & Managing Director, Central Bank of India
• Hong Zhong, Director, Strategic development, Bank of China
• Yueqiu Zhou, General Manager of Custody Service Department, Industrial and Commercial Bank of China Limited

The session title was: China and India, which is going to be the one? which is a bit of a stupid title, as it is China and India, not China or India as was confirmed by the panel.

Emmanuel opened the discussions with the statement that if we were sitting here in 1960 looking at the future, we would have very different views. If we were sitting in Singapore, we might have thought it was Sri Lanka or Burma. If we were in New York, we might have looked to Argentina. Fifty years later, we look at China and India, so which is going to be the one?

My view: we would still have very different views.

Zhong: “Our leading position in Remnimbi transaction management has been strengthened immensely, which is why our transaction banking revenues and margins are increasing so well.

Then we had to put our headphones on as the Chinese panellist Zhou from ICBC answered in Chinese.

Zhou: “we have 160 milllion customers” .. that’s not many is it?

Chandrasekaran: “India and China is all about scale. We need to build big systems with great magnitude. 30% of growth will come from emerging markets, and this is not a case of China or India, it’s wherever business in the world is being generated. This is not ‘either’, ‘or’ but both.”

Sridah: “We have 5,400 branches, $50 billion in assets and 30,000 staff. We were set up in 1911 and, in 1923, TATA took a controlling shareholding in the bank until 1969 when all banks were centralised.”

Patel: “65% of India’s population is under the age of 35 and they are aspirational. They want to break the glass ceiling and make it for themselves. Meanwhile, before the BRICs, there was the Silk Road, and India and China were creating growth in this region. It is not a binary choice. If you have a cow that gives you 20 litres of milk, if you cut it in half, what do you have? 40 litres of milk or a dead cow? That’s what China and India is all about, they are together and cannot be separated.

Daniel: “The idea of China and India being competitive is not how Asia thinks. We think cooperative not competitive, so it’s not India versus China but India with China.”

Gerard: “The next big challenge is water and the environment. India has an infrastructure and regulatory challenge. India’s pluses compared to China is its democracy, legal system and property rights. China still needs to address property rights. Demographics is seen as a positive in both countries, but China’s population is aging quickly and has a gender problem. China has 119 males to 100 females and India has 111 males to 100 females ...”

Gerard: “If you go to the Bank of England and others, they are now talking about adopting macroprudential measures from the East ...”

Gerard: “I’m often asked if China and India are bubble economies and my answer is no, but they are economies subject to bubbles. This is because, as money flows in, it goes into property and more, and creates the false bubbles ...”

Gerard: “You cannot continue to sell goods to westerners up to their eyeballs in debt ...”

Gerard: “The three words for the last decade were ‘made by China’; the three words for the next are ‘owned by China’.”

Gerard: “India needs to go from IT services to manufacturing to generate jobs, and then there will be a swathe of growth that will stretch from China through India to Africa.”

Gerard: “The Chinese have earmarked high-end manufacturing, electric cars, pharmaceuticals and environmentally friendly sectors as their next target industries for growth.  They want to own those sectors.”

Gerard: “Twice before the world has had a supereconomic cycle: at the end of the 19th century with America and 1945-1990 when Japan led the world. We are now in a third supercycle where these two economies – India and China – account for a third of the world’s economy and two-thirds of the world's growth ... as a result, by 2030, India will have grown 8.4 times in size; China by a factor of four; whilst America and Europe just 1.7 times.”

Daniel: “The custody earnings of ICBC is enough to buy State Street, so why did you not do that?”

Zhong: “ICBC will have five branches in Europe this time next year, and 35 overseas branches overall. We are going global. It’s the global investors coming into China and Chinese investors who now want to invest abroad.”

There were other discussions, but I was struck by several thoughts:

1) Yes, China and India are important, but they are not the be-all and end-all; what about Latin America and Russia and Africa?

2) The Remnimbi is the next reserve currency, but is there a basket of currencies today rather than a currency, that we should focus upon?

3) If trade flows focus for the next fifty years around Asia, what does that mean for Europe and America?

And more.

These are all questions I've blogged about as they feed into the innotribe Long Now debate we've been having which Paul Saffo will refer to this afternoon in the closing plenary.

Can't wait.

Meantime, off to Citi's booth for some champagne and nibbles.

The celebrations begin.

P.S. SIBOS feels like it's BAU, e.g. isn't this just like the old days ... by old, I mean pre-Lehmans of course.