One other bit of data is that I was at the Chinese Financial Association conference over the weekend in which Chinese mutual managers were actively trying to recruit Wall Street professionals to come back home and manage portfolios. In the short run, there is a huge demand for all sorts of people to manage QDII transactions. In the long run, one fund mentioned that they were looking for people with experience investing in emerging markets.
The other thing that I got from the conference was how close the cooperation is between Hong Kong and mainland markets. One of the medium term goals of the PRC government seems to be to have Hong Kong displace Tokyo as the center for finance in the “third time zone” as well as to tap into the financial expertise that exists there. One interesting part of this is that one of the goals of Hong Kong appears to be to become a center for Islamic finance which ties into a lot of the themes in this post.
About currency revaluation….. There was a mid-level official from the PRC who gave a talk. He didn’t answer any questions about currency valuation directly, but he did say to read Hu Jintao’s remarks at the party congress in the original Chinese, and that “interesting things are about to happen.”
It was also curious to hear a talk from someone that worked in the Treasury during the mid-1990’s and to hear first hand what they said happened and the relevance to China. Far from trying to destroy East Asian economies, that person said that Treasury and the IMF were trying hard to pump money into the southeast Asia during the crisis, but they were just overwhelmed by the scale of the capital flows.
The final thing about the conference was that it would have been a playground for conspiracy theorists. You had people from the Council of Foreign Relations, Wall Street bankers, ex-officials from the US Treasury Department, officials from the Chinese government, and the heads of some of the Chinese mutual funds all in one room. One point that the PRC official made was that he travelled all the way from China to give a twenty minute talk because the people in the audience, who were a sample of Chinese people who work in Wall Street finance were the precisely people who are going to be making the big decisions in the future.
Yes there is a vast conspiracy. I’ve seen it. I’m actually part of it. Care to join in?