Innovation crucial to keep economic power in East: StanChart chief
The worldwide financial meltdown triggered by the collapse of US investment bank Lehman Brothers in 2008 helped accelerated a "fundamental shift" in the balance of economic power from West to East, says Peter Sands, group chief executive of Standard Chart
Sands told a forum sponsored by Asia Society recently that this development was taking place because some developed Western economies are struggling to cope with the legacy of the financial meltdown. Their economies have barely grown and they are beset by problems of high unemployment and excessive debt. In contrast, such countries as China and India are continuing to grow and forge ahead.
“It is undeniable that in terms of both GDP and where prospective growth is coming from, there has been and continues to be a big shift in the centre of gravity,” Sands said.
In his view, the shift from West to East is happening even though fast-growing Asian economies have their own share of problems and challenges. Two factors that are blighting emerging Asia, he says, are the lack of innovation and a dearth of influence in the international arena.
“It is imperative for Asia to put more focus on innovation,” Sands urged. In this respect, the Standard Chartered banker believes China is on the right track.
By making innovation an important theme of its 12th Five-Year Plan (2011-15), Sands said the country was clearly gearing up to move up the value-added ladder.
Still, emerging Asia faces the challenge of participating on an equal footing with advanced counterparts in international regulation cooperation.
Sands said too much of the policy agenda in financial regulation was backwards-looking, designed to avoid another Royal Bank of Scotland or Lehman debacle, whereas too little caters to the needs and priorities in the emerging world.
The banker hopes the playing field in financial regulations will be levelled to give Asian policy-makers a louder and clearer voice.
Sands said Asian banks had indeed emerged from the global credit crunch in far better shape, but the region’s lack of influence on international rule-making threatened to undermine the long-term viability of its banking sector.
“Asia can no longer mind its own business,” Sands remarked. “It must get involved in world business.” |
