London-based HSBC hasn’t yet said whether Britain’s exit from the European Union will force the bank to move its headquarters to its second home in Hong Kong, but listening to Chief Executive Stuart Gulliver you’d be hard-pressed not to believe he’s considering taking the plunge.
Speaking at a Handelsblatt-sponsored conference on Asia in Düsseldorf, Mr. Gulliver made clear where he believes the opportunities are – not just because the continent's economies are growing faster than the developed world, but because it may actually be the more welcoming region for businesses in the coming years.
“Asia is a beacon for trade openness at a time when parts of the developed world are turning to protectionism,” Mr. Gulliver said. “Asia policymakers understand that increasing trade openness is good for the region.”
Europe has to realize that globalization is not only their definition of it, Gurjit Singh, Indian Ambassador to Germany
That includes China, a country that had been long reluctant to take a global role. Mr. Gulliver said he expects the Asian powerhouse will “fill the vacuum” in the region that is being created by U.S. President Donald Trump’s decision to pull out of the Asia-Pacific free-trade deal known as TPP.
That creates opportunities for European businesses, too. Rather than look west toward the United States, where Mr. Trump has been openly espousing a more protectionist policy, Mr. Gulliver suggested Europe should be looking east, even if life there won't be easy.
China, the region’s largest economy, still imposes major constraints on foreign firms investing in the country. The trend may be toward openness, but trade is still more restricted than in the United States.
Hans Van Bylen, chief executive of German consumer and adhesives conglomerate Henkel speaking at the same conference, said “high growth goes hand-in-hand with higher volatility” across many Asian countries. Still, there was no alternative but to push forward.
It's not clear that everyone in Europe is willing to take the plunge. Investment by European firms in China has declined in the last few years, while many in Germany and elsewhere have been wary of China's increased investments in Europe and called for protecting local industries and jobs. Anti-trade rhetoric is also common among a growing number of politicians.
"The question is whether Europe follows the United States in turning inwards" or whether it forms an alliance with countries like China that are looking to liberalize, according to Frederic Neumann, co-head of Asian economic research at HSBC.
Mr. Gulliver said he recognized the ongoing restrictions on foreign firms in China, but pleaded for patience. Reforms in China would not always be “linear” and were currently slowing, especially as the country's own growth pace has slowed. But the direction, he insisted, is still clear: China is moving toward becoming a more open economy.
“China will run a tactical race rather than a sprint to the finish line,” Mr. Gulliver said. When it’s done, however, it will be the largest consumer market the world has ever seen.
Given the shifting dynamics, other Asian countries could also become more confident in their dealings with Europe and the United States. While trade deals like TPP were heralded as an example of the United States helping set the global standards for trade, Asia may now be more likely to bring its own interests to the table.
“Europe has to realize that globalization is not only their definition of it,” Gurjit Singh, the Indian ambassador to Germany, said of stalled negotiations between Europe and India over their own free-trade deal, for example.
Handelsblatt Global's Christopher Cermak writes about finance and economics. To contact the author: [email protected]