In our end of year awards, we sent out polls to determine the best firms in areas such as trade finance and foreign exchange.
This year, we decided that it would also be interesting to ask the people that drive Asian trade and forex what their views were on some bigger picture issues.
The first thing we asked was whether they thought 2003 would be a better year for Asian trade than 2002. We received 108 responses on this question and interestingly 78.7% answered in the affirmative ie the overwhelming majority expected stronger Asian trade flows next year.
This might suggest that Asians are more bullish on a quick US recovery; and equally that intra-Asian trade flows continue to grow rapidly. Several mentioned the importance of China in the ?comments' section.
Following from this, we asked the Asian companies we were polling whether China was a "threat or an opportunity" for their business. Of the 107 who answered this question, the result was again overwhelming - 77.6% thought China was an opportunity.
One respondent noted that China was "a vast market with the world's highest growth rate." Several added that China's entry into WTO would be positive.
One sensed that competition would be good. Just as Europe benefited in the period from 1500-1800 from warring competition among its nations that drove innovation (see Paul Kennedy's the Rise and fall of the Great Powers); a similar sort of hyper-competition between economies in Asia in the next 50 years will drive every economy to be more and more efficient relative to everywhere else in the world. As one respondent put it: ?Other Asian countries should strive hard to do better than China in terms of quality products. Competition is good for the end users."
However, some were bleaker and saw China as a real threat to their business. Said one: "With its competitive advantage, China is a great threat to many other countries like Indonesia, India, Thailand etc."
Said another: "China is dumping goods to the detriment of other producers." And an Indonesian responded: "Business in China is now more efficient compared to business in Indonesia, due to the labour and taxation issues."
This issue obviously brings up another of the great questions - when will China allow its currency to float? This is obviously of paramount interest to Asian exporters, all of whom believe that China is subsidizing its exports through an undervalued exchange rate.
Some draw the comparison with Japan in the late 1960s and early 1970s when it used a weak exchange rate of around Y350 to the dollar, to become the premier manufacturing economy in the world.
This question received a total of 280 responses from treasury officers in corporate Asia. Interestingly, the largest group thought the renminbi would float in 2005 (33.5%). About 46% thought it would happen between 2006 and 2008. Only 11% thought it would happen after 2010.
Overall the data tells us that three quarters of Asia's forex experts believe that the Chinese currency will become one of the world's major free-floating currencies by 2008.
For anyone working in the financial services industry in Hong Kong you can mark that in your diary as the year you will definitely be moving to Shanghai.
