Today's guest: David Liao, President and CEO of HSBC Bank (China) Company Limited

Q: We can say that Shanghai is the birthplace of HSBC. In 1865, the Hongkong and Shanghai Banking Corporation Limited was established in Shanghai. When it registered here in 2007, the headquarters of HSBC Bank (China) was once again located in Shanghai. How has HSBC's mainland business evolved over the past few decades?

A: For more than 150 years, with its roots spreading into China, HSBC has served the mainland market continuously. Particularly in the 40 years since the reform and opening up, HSBC has been actively involved in and has supported various financial reforms and market opening measures in China. On this basis, it has been continuously expanding its business scope, continuously adding service outlets, cultivating local talents, and achieving steady growth in scale and performance.

In addition, HSBC has also utilized its global network strengths and cross-border service expertise to support the development of China's real economy. While developing its own business, HSBC has maintained a close business cooperation relationship with its strategic partner, Bank of Communications, taking advantage of their respective advantages both at home and abroad to jointly provide financial support for Chinese enterprises "going global" via cooperation across a number of areas including syndicated loans, bond financing, capital management and asset custody.

For HSBC Group, China is still a strategic market. Looking ahead, we will continue to steadily push forward the development of our mainland business. With our international service expertise, we will further support China's financial reform and market opening to serve the sustainable development of its real economy.

Q: Since China's entering the WTO, what changes do you think have taken place in China's banking industry, especially in foreign banks?

A: From HSBC's point of view, the decade that was available for local registration after entering the WTO was a golden period for foreign banks to forge ahead, reflecting the huge opportunities for development offered by China's economic growth and the opening of its financial markets. Therefore, entering the WTO provided an unprecedented broad stage for the overall development of foreign banks in China.

Over the past decade, HSBC has constructed RMB service capabilities in more than 50 markets worldwide, providing cross-border support for companies and institutions. Its overseas service departments of Chinese enterprises were set up in 25 major markets around the world to assist Chinese and foreign enterprises in participating in the construction of the "Belt and Road". 

It also played an important role in the opening of the capital markets to connect participants at home and abroad; likewise, it participated in advance financial innovation in free trade zones so as to meet the financial needs of clients in cross-border capital management and other areas. It also actively shared its international experience and has popularized the concept of sustainable development in exploring the development of green finance.

In general, Chinese policy makers are steadily and continuously pushing forward with economic transformation and are deepening financial reforms. They are committed to developing a multi-layered financial system and building a more transparent capital market. HSBC is convinced that in the long term, China will become a more open and innovative economy, and the foreign banks and other market participants there will have more room for development.

A more open China contains huge business opportunities

Q: How do you think China will host the first China International Import Expo?

A: The first China International Import Expo is a practical action taken by China to support economic globalization and trade liberalization. By further opening up its market to the world, China can practice the concept of seeking common development and sharing the results. 

HSBC believes that a rules-based free trade system would not only benefit the economies involved, but also be the best way to boost world growth and prosperity. The certainty and stability of trade policy frameworks is particularly important for companies in the global trade chain. 

Under the background of the international multilateral trade order facing challenges and the rise of trade protectionism, China's hosting of the International Import Expo as the world's second largest economy is of greater far-reaching significance, because China's positive attitude and substantial efforts for trade promotion and investment liberalization will play a vital role in boosting world economic growth. 

Looking at home, China's economy has transformed from an export-driven growth model to a domestic demand-driven growth model. According to HSBC's analysis, the ratio of total exports and net exports to China's GDP has decreased from 35% and 9%, respectively, before the global financial crisis to 18% and 2%, respectively, in 2017, and domestic demand has clearly taken the absolute leading role in China's economic growth, among which consumer spending has undoubtedly played a leading role. For example, final consumer spending contributed more than 78% to economic growth in the first half of this year, up 14 percentage points from a year earlier, and the performance of on-line retail is particularly impressive.

Moreover, the service industry now already accounts for more than half of China's GDP. In the next several years, thanks to the changes in consumption patterns of middle-income people, the continuous improvement of public transport facilities and the acceleration of the trend towards digitization, China's service industry will continue to maintain strong growth and jointly promote the development of China's foreign trade and economy with trade in goods.

Looking ahead, the Chinese market will undoubtedly be more open, and the development of foreign trade will be more dynamic and more balanced. According to official predictions, China will import $24 trillion of goods and absorb $2 trillion of overseas direct investment in the next 15 years, with total foreign investment reaching $2 trillion. For all of China's trading partners, there are definitely huge opportunities.

Q: HSBC has decided to participate in the first CIIE. What are your expectations for this world-class exhibition?

A: Given the aforementioned macroeconomic situation and trends, it is exactly the right time for China to host the CIIE. The expo has received widespread attention from China's trading partners, and overseas enterprises registered to participate in the exhibition are also very enthusiastic. We are eagerly looking forward to the successful completion of the CIIE.

Global network, universal banking and financial innovation are the three major characteristics of HSBC for the expo

Q: We know that HSBC will participate in the trade in services area of the expo. What presentations will you bring with regards to financial services?

A: From the perspective of HSBC, cross-border trade is one of the major impetuses to promote global economic growth, of which the development of trade in services has been on the rise in recent years. And financial services play an important role in supporting economic globalization. Its level of development has a direct influence on the operational efficiency of cross-border trade and investment. 

For the increasingly open Chinese market, cross-border financial services are an indispensable link to support China-invested enterprises to go global as well as assist overseas-funded enterprises to enter the Chinese market.

This year, the Chinese government has launched a series of significant opening-up measures, covering finance, infrastructure, transportation, business circulation, and other service industrial sectors. HSBC believes that the achievements of these opening-up measures will set up a broad exhibition platform for the expo.

HSBC attaches great importance to this grand event. For this purpose, we established a special work group in Shanghai for the internal and external coordination and promotion of various work, including cooperation with the HSBC overseas groups. Though the specific plans and details are still being worked out and adjusted, one thing that is certain is that we will invest massive resources to ensure that our advantages and strengths in the cross-border financial services field can be demonstrated to more enterprises via this platform. 

Specifically, we will highlight three major characteristics of the HSBC Group in the expo, namely its global network, universal banking and financial innovation. These are the highlights that we expect to show our strengths through the expo.

HSBC will seize new opportunities in the consistently open Chinese financial market

Q: Shanghai issued the 100 policies regarding further opening-up not long ago. Under these new opening-up policies, what plans will HSBC have for its business development in China in the future? Will there be plans to step into new fields?

A: As I have mentioned earlier, Shanghai is the birthplace of HSBC, and the name "Hong Kong and Shanghai Banking Corporation Limited" embodies our connection to this vibrant city. The recently issued 100 policies is another example of Shanghai's continuous promotion of opening-up to the outside world, as well as its practice of the city spirit to "be tolerant of diversity, be excellent, enlightened, wise, inclusive and humble". HSBC is pleased to see a more open Shanghai and will take an active role in seizing development opportunities.

The Chinese market is an important growth engine of the HSBC Group in business development. As the biggest foreign bank in mainland China, HSBC will continuously grasp the development opportunities of China's economic transformation, consumption upgrading and "Internet +", to support and participate in the financial reforms and the opening of China's capital markets to the outside world. HSBC will actively promote the internationalization of the RMB, and it will implement the business strategies of the "Belt and Road" Initiative and green finance. At the same time, we will also seize opportunities to launch new business in a timely manner as the financial markets continue to open up.

Specifically speaking, first, China-invested enterprises and their overseas partners have an increasing demand for financial services-such as strategic consulting, financing, hedging strategies and liquidity management-on many "Belt and Road" projects. By virtue of HSBC's integrated banking service model and supplemented by the geographical coverage of the "overseas service department of Chinese enterprises", we can provide comprehensive financial support to our clients in expanding cross-border cooperation over the "Belt and Road" as well as and help Chinese enterprises with their increasingly global business development.

Second, the implementation of the "Guangdong-Hong Kong-Macao Greater Bay Area" development plans has undoubtedly brought the cooperation of these three regions to a new stage. The Pearl River Delta Region is one of the strategic priorities of HSBC in expanding its business in Asia. Our goal is to build a large-scale banking business in the Pearl River Delta Region. Since the group announced the development strategy for the Pearl River Delta in June 2015, the business of HSBC in the region has maintained steady and rapid development. We will actively participate in the development of the Greater Bay Area with our linkage advantages between Guangdong, Hong Kong and Macao.

Finally, China will continue to play an important role in working with other partner markets to cope with global climate change and in building a green economy. For achieving the target of sustainable development, China has launched a series of policies and measures to support green development, and the country is focused on building a "green silk road" that will attract more domestic and overseas institutions to participate in the relevant green finance projects. HSBC also hopes to become the bridge between green bond issuers and investors, while also actively promoting the development of green financial business.