BEIJING – “When I hit the big time, I will buy a BMW-7 series car as my marriage dowry,” said sparkling 22-year-old Jian Jingtao. “I’ll give it to my fiance to show him how much I love him.”
In China, the cheapest BMW-7 series model costs nearly 1 million yuan (US$133,000) while the average annual income for urban residents nationwide was only 12,000 yuan in 2006.
Jian, a civil servant in the southwestern province of Sichuan, makes about 1,200 yuan a month, and she also works as a part-time weather girl at a TV station in Liangshan Yi Autonomous
Prefecture, an impoverished region in Sichuan, where most people haven’t even heard of BMW. The part-time job doesn’t bring her much money.
Then, how can she possibly realize her dream? Well, instead of counting on her part-time job, she has other ideas.
“I’m taking the Chartered Financial Analyst [CFA] test and I’ve passed level II,” says Jian, her eyes shining with hope. “Just one step away from the best financial institutions.”
She believes getting a job in such institutions will mean she is one step closer to her dream car.
Official data suggest that staff workers in China’s well-known financial institutions make 15,000 yuan a month and more. And jobs in the financial sector have being taking the lead, driven by the basic principle of a market economy’s supply and demand.
About 45 million people will join the labor force in the next five years in China, but many of them will have to take jobs as laborers and construction workers and make just 800 yuan a month.
When lecturing in China’s leading Tsinghua University, China Construction Bank (CCB) chairman Guo Shuqing testified that the most troubling problem facing his bank in its “go overseas” strategy is a shortage of talented professionals.
CCB, one of China’s “Big Four” state-owned commercial banks, wants to set up branches in New York and London, Guo told the students, adding that the bank is “hungry for people specialized in financial accounting, securities analysis, portfolio management, interest rate pricing and foreign exchange pricing”.
China, the world’s fastest-growing economy with an annual gross domestic product (GDP) growth of almost 10% for the past 10 years, has long been considered the world’s factory, producing about 75% of the world’s home appliances, for example.
But as the country moves to a more market-oriented financial system, financial talent is at a premium because there are many issues to deal with.
As a major reform in the financial sector, China dropped its currency peg to the US dollar in July 2005 and linked the yuan to a basket of foreign currencies, allowing it to float in a 0.5% band (which was expanded to 0.5% this year) around the official central parity.
“Everything changed when they expanded the fluctuation range to 0.5%,” says textile trader Wei Changshan from Beijing-based Dongxing Textile Co. “I’d really like to hire someone to tell me about how to manage it.”
In July 2005, one US dollar could be exchanged for 8.28 yuan. On September 21 this year, the same dollar could be bought for just 7.51 yuan.
Hearkening to overseas comments, Yi Gang, assistant governor of the People’s Bank of China (PBoC), the country’s central bank, said that the exchange rate of the Chinese currency would gradually become more flexible.
As for the stock market, the benchmark Shanghai Composite Index surged by more than 130% year-on-year in 2006 after a five-year bearish market, thanks to reformed securities regulations and continuing strong economic growth. China’s stock market is now the largest in Asia by market capitalization.
As new regulations come into play concerning foreign investments, Chinese fund managers and securities traders would like to compete with overseas competitors. The lack of financial talents seems serious.
A recent government document on qualified domestic institutional investors (QDII) allows domestic fund management and securities companies to follow commercial banks into the arena of overseas securities.
“We started preparing for QDII products nearly six months ago,” said Xu Xiaosong, vice general manager of China Southern Fund Management. “So we are recruiting. Unfortunately we are not the only ones. A number of big securities companies are looking for people,” said a fund manager who asked to remain anonymous. “It’s simple. If we want to win the competition we need the best team.”
Not surprisingly, foreign banks are also on the lookout for qualified people in China. In 2005, the Bank of East Asia opened personal services, the first to do so in China.
In the China-US Strategic Economic Dialogue held in May, China agreed to allow foreign banks to issue their own yuan-dominated credit and debit cards. The move is seen as a way of boosting fair competition between local and foreign financial institutions.
At the third national conference on financial work early this year, Chinese Premier Wen Jiabao said that China would facilitate fair competition between domestic and foreign financial institutions.
As the government opens the banking sector to meet its World Trade Organization commitments, the human resources battle for the best and brightest in the financial sector has escalated as well.
HSBC expects to grow its headcount from 3,000 to 4,000 in China this year and Citigroup plans to hire about 1,000 extra people. Standard Chartered said it did not have a specific target this year but hired 1,000 in 2006.
Finding enough experienced staff and training them adequately is the toughest issue confronting the bank, HSBC China chief executive Richard Yorke said earlier this year.
“There is no real finance education in Chinese colleges,” noticed Wang Zhao, an economist with Beijing University’s China Center for Economic Research. “The so-called finance [education] in colleges only consisted of macro-control measures, such as monetary policy, that hark back to the days of the planned economy. What Chinese students want now is courses on securities analysis and portfolio management,” he said.
A recent international survey released by Deloitte Consulting found that two-thirds of the 636 senior finance executives surveyed thought the supply of high-quality talent in Asia was limited or inadequate.
“The crucial but tricky part is that you have to master international practice as well as the local reality,” managing director for Asia-Pacific Operations CFA Institute Jane Squires commented.
“This year, 10,200 people signed up to take the CFA test in China, up 30% from last year,” Squires said. “We can reasonably project that there will be 600 more CFA holders at the end of 2007.”
“I can’t say how many financial experts China needs but one thing is certain, there is plenty of room for those who have the capacities. The United States currently has 44,220 people who hold the CFA qualifications. In comparison there are 3,650 in Hong Kong, 2,133 in Singapore and just 1,086 in China,” she said.
China has outlined its new policies for the financial sector, including deepening the reform of state-owned banks, facilitating rural financial reforms, and steadily pushing forward the reform of foreign exchange rate.
The country’s financial sector is set to speed up as the market continues to swing open. In that case, Jian Jingtao, the young lady with so many traditional Chinese virtues, has an excellent chance of realizing her dream and the dream of her lucky boyfriend, probably with a little help in the shape of a bank loan.