Income Statement – August 2017
Income Statement – July 2017
Income Statement – July 2017
July 22, 2017 Board minutes
July 22, 2017 Board minutes
China’s banks are not going to collapse – and here’s why
James Stent, a former director of the audit committee of the China Everbright Bank. Photo: Sarah Graham/FCCChina’s banks are unlikely to collapse despite continuing fears over bad debt and shadow banking, says a former auditor of one of the country’s biggest state owned banks.
A hybrid system coupled with a cautious step-by-step approach to economic policy are two of the reasons why mainland banks will prosper, said James Stent, a former director of the audit committee of the China Everbright Bank.
Shadow banking has increased in China in recent years, resulting in new rules to discourage banks from using borrowed money to invest in bonds being issued by the China Banking Regulatory Commission (CBRC).
Stent, who was promoting his book, China’s Banking Transformation: The Untold Story, said that although “mainstream consensus for the last 15 years on Chinese banks has been overwhelmingly negative”, he had seen a dramatic transformation in his 13 years working first as a director at China Minsheng Bank, then Everbright.
As Stent was outlining his case for China’s stealth banks at the September 21 club lunch, S&P Global Ratings cut China’s sovereign credit rating for the first time since 1999. At the same time, however, it revised its outlook to stable from negative.
“China’s prolonged period of strong credit growth has increased its economic and financial risks,” S&P said. “Although this credit growth had contributed to strong real gross domestic product growth and higher asset prices, we believe it has also diminished financial stability to some extent.”
However, Stent said China’s 17 nationwide commercial banks in reasonably good shape today, but that those lower down, “the weaker, smaller regional players” at city and provincial level were “very much a work in progress” and still had some way to go.
Cultural values were also playing a part in the “night and day” transformation of China’s banking system, he said. Where the U.S. is “all about individualism”, China “is all about the group… it starts with family and it’s all about your responsibilities to society, your duties, your obligations,” said Stent, now Senior Counselor with Vriens & Partners.
“China thoroughly understands market forces – with the Chinese market forces are a means, not an end. The Chinese do not believe markets solve all problems. They believe that the objective is not the market, the objective is building wealth and power for the nation and the people. China therefore has what I call the hybrid banking system: it’s partially market and it’s partially socialist,” Stent said.
This was where China’s cautious approach to economic policy came in, Stent said. It would prefer to avoid risk likely to affect the economy and was therefore slow to develop and implement policies on a national scale that were not tried and tested first on a local scale.
He said the great change in thinking came about after the Asian financial crisis of the late 1990s, when the government ordered banks to restructure to reduce non-performing loans (NPLs). China looked to good foreign banking systems to determine how it could create a successful one of its own. And it had not only caught up with good overseas banking systems, China had leapfrogged its foreign counterparts with far more advanced banking technology. Stent said you only had to look to China’s abilities in the digital payment area to see how far ahead of Western banks it is.
Part of the reason why the West has had a negative attitude towards China’s banking system is that it doesn’t understand the different context in which Chinese banks operate, Stent said. Its banks are “deeply embedded in a political economy which is very different from any Western economy, and that political economy is in turn embedded in a totally different set of cultural values”, he said.
Most directors of banks were also Communist Party members, so would also have the national interest at the heart of their decision-making.
A crackdown on China’s US$9.4tn shadow banking business and new regulations in all areas had hit bank share prices but was an indication of how serious it was about reducing risk, Stent said.
Chris Patten: Hongkongers need to stop talking about killing one another and talk to each other
Chris Patten spoke about Hong Kong and its political issues at the FCC.Chris Patten, Hong Kong’s last colonial governor, said he hopes Hongkongers on opposing political sides will have a “dialogue” instead of talking about “killing one another”, following a university campus spat over independence.
Lord Patten of Barnes, who was at the FCC to promote his new book, First Confession: A Sort of Memoir, which explores the former Conservative MP’s “obsession” with identity politics, also spoke about Joshua Wong’s incarceration, and the future of the One Country Two Systems framework.
During a discussion about the pro-democracy and pro-independence movements in the city, Lord Patten reiterated his view that the latter would only serve to dilute any campaign to bring democracy to the city.
His visit came just days after a university row saw pro-independence students clash with their peers from the mainland over posters advocating independence for Hong Kong, which were put up at the Chinese University campus, heightening simmering tensions in the city.
“What I hope is that people will start talking to one another again. I hope there’ll be a dialogue. You can’t simply expect people to accept your values or standards or political judgements without talking to them about it. You can’t trample ideas into the dust. You have to talk to people and listen to people,” he said.
“People should be prepared to talk to one another, not fight another, or not talk about killing one another, or not putting out posters welcoming people’s suicides,” he told the packed club lunch on September 19, where guests included former Hong Kong Finance Secretary John Tsang and ex-Chief Secretary Anson Chan.
Lord Patten said he hoped Hong Kong – “a city which I love as much as anywhere in the world” – would continue to thrive.
When asked what he would do if he were the UK’s leader, he said: “First of all I’d be pleased that the last six-monthly report by the Foreign Office was a bit more honest and outspoken than some reports had been in the past. Secondly, I would begin from the assumption that we shouldn’t believe that you can only do business with China over Hong Kong or over anything else from a position of supine deference. The fact that the Chinese do it is because other countries allow them to. I don’t think it should be something we necessarily criticise them for if they can get away with it. If they can get away with weaponising trade, for example, they’ll go on doing it. But I don’t think they respect you for it and I don’t think its the only way you can do business.
“I would come to Hong Kong, I would make a speech saying that I thought Hong Kong was fantastic, that I thought it was a jewel in the crown for China potentially as we go forward into the future; that it represented in the 21st century an issue which is going to be dominant – that is how you balance economic and political freedom and what sort of role China has in the world today, what sort of role it’s prepared to take in global governance, how it’s prepared to make more of the footprint that it should have because of its economic strength and power.
“And I would hope to go on to China and say similar things.” He add that he would also raise the issue of Liu Xiaobo’s wife. Liu Xia, who has been under house arrest since her husband, a prominent dissident since the 1989 Tiananmen Square pro-democracy protests, won the Nobel prize in 2010. She was last seen in a video recorded in August and posted on social media in which she asks for time to grieve. Many of her supporters and friends, however, have expressed concern for her welfare.
Justice Secretary Rimsky Yuen also came in for criticism from Lord Patten as he was asked for his thoughts on the upcoming trials of nine pro-democracy activists involved in Occupy Central. Lord Patten said he was “loathe to comment on ongoing legal processes in Hong Kong”, and instead chose to speak specifically about Joshua Wong, Alex Chow and Nathan Law – jailed in August for their part in the 2014 protests.
He criticised the Justice Secretary’s decision to appeal their original non-custodial sentences, saying it was politically motivated. “He’s grown up. He must know, as I said earlier, that actions have consequences, and not to understand what signal that would send to the rest of the world, strikes me as being, to be frank, a little naive,” he said.
Referring to a Reuters report that Yuen had insisted on reviewing the sentences despite opposition from fellow prosecutors, Lord Patten added: “Perhaps it would have been wise to take the advice which we were told he was receiving from someone in his department.”
HKJA: We’ll monitor Hong Kong media accreditation rules to ensure digital-only outlets treated fairly
Carrie Lam. File photo: InMedia/GovHK.The Hong Kong Journalists’ Association (HKJA) welcomed with caution today the decision to lift a ban on digital-only news outlets attending government events and press conferences.
The government’s u-turn comes almost a year after the city’s Ombudsman ruled in favour of allowing digital media outlets to attend such events, and follows intense pressure on the Hong Kong government from local and international media watchdogs.
“We welcome the government’s long overdue decision to lift its bar of digital only media from its press functions. We will monitor the implementation of its accreditation policy to ensure all media are fairly treated. The result of the implementation will decide whether the Association will continue with the judicial review against the government’s online media policy. We call on the government to make corresponding adjustments to its press venues and functions to accommodate the expected increase in journalists,” a spokesperson said.
The FCC issued a statement saying it has long supported the demand by HKJA and all Hong Kong online-only media that they be treated equally to other “traditional” media. “The FCC shares the relief and satisfaction of all online media and salutes the government for this fair decision.”
Tom Grundy, editor-in-chief of digital-only Hong Kong Free Press added: “This long-overdue reform follows years of pressure from local and international press freedom watchdogs, criticism from media groups and NGOs, legal threats and hard work by reporters fighting for equal access rights. The Hong Kong government’s effort to modernise and recognise how voters consume news nowadays is commendable – we hope the new rules will create a fair, level playing field for all media.”
(i) It can provide proof of regular online news reports in the past three months immediately preceding the application;
(ii) It has been updating its news platform at least five days a week;
(iii) It is staffed by at least an editor and a reporter; and
(iv) It is registered under the Registration of Local Newspapers Ordinance (Cap. 268).
The ISD said it will review the arrangement after six months.
However, IT lawmaker Charles Mok cast doubt on the reliability of the accreditation rules, issuing a statement claiming that requiring digital outlets to register for accreditation under the Registration of Local Newspapers Ordinance was outdated.
The statement said: “Mr Mok’s three remarks on the new arrangement for online media:
Curiosity, Adventure & Love: Last chance to book your seats for documentary screening
Producer Sunshine de Leon said the film took eight years to make. Photo: Sunshine de LeonA documentary recounting the story of a young American woman’s life in the Philippines from the 1930s to today is set to be screened at its 6th film festival – but FCC members and guests will get a sneak preview of the film this week.
Curiosity, Adventure & Love is narrated by 105-year-old Jessie Lichauco, a Cuban-American migrated to the Philippines where she met her husband Marcial Lichauco, a Filipino diplomat and lawyer. She shares her experiences of the country as it went through war, occupation and reconstruction. It was announced on Monday that the film would be screened at LA Femme Film Festival in Los Angeles next month.
The film’s producer, Sunshine de Leon, is Jessie’s granddaughter. A freelance journalist, Sunshine said from a young age she knew her grandmothers story was fascinating and had initially wanted to write a book. Over the years Sunshine began to collect anecdotes from Jessie. But a chance suggestion changed the course of the book.
“So, when one day, a film-maker friend suggested that since she could still tell stories at her age and she remembered history with details that made it come alive, she would make the perfect character for a documentary movie I said, with complete naivety, “You are absolutely right. I am going to make a film”,” she said
Simple? Not quite – it would be eight years before the film was made.
“I think the film took a long time to produce because 1) I was doing it while working as a freelance journalist and 2) it was my first film and I had no training whatsoever in filmmaking and for the first few years was working completely on my own. I eventually met my co-producer and co-director Suzanne Richiardone – and from that point it took another four years.”
she continued: “I knew I had a good story but how to weave together the elements of that story in the most powerful way was a challenge. We were trying to blend history and biography with lessons in life and humanity.“
By recounting her life in the Philippines, Jessie sheds light on the country’s turbulent history, including the Japanese invasion and occupation during World War II; and life under the corrupt Ferdinand and Imelda Marcos.
Sunshine says she hopes the film reacquaints some Filipinos with the history of the country. “I have found that quite a lot of Filipinos are not very familiar with the history of the Philippines and I believe that the detail with which the main character, an American and my grandmother, remembers this history makes it come alive in a unique way.
“It’s important to understand the past in order to comprehend the present and move forward in the best way possible. I hope that they walk away with a greater understanding of what has made the country into what it is today and I hope they learn from the wisdom she shares about how to live our best lives. and are inspired to do more to help the country (and the world!)”
Curiosity, Adventure and Love is showing at the FCC on Wednesday, September 20 from 7pm, where Sunshine will give a short talk to introduce the film. $100 (MEMBERS) $150 (GUESTS). Fee will include one drink. Please reserve with the FCC concierge at (+852) 2521 1511 or (email) gro.khccf@tneveccf
FCC statement on detention of photojournalists covering Rohingya crisis
The Foreign Correspondents’ Club of Hong Kong and the Editorial Committee of The Society of Publishers in Asia (SOPA) are deeply concerned about the detention of photojournalist Minzayar Oo and his assistant Hkun Lat, Myanmar citizens who were on assignment in Bangladesh for GEO magazine to cover the Rohingya crisis. We call on Bangladeshi authorities to immediately release both of them.
Minzayar Oo and Hkun Lat were assigned by GEO magazine because of their professionalism and their journalistic integrity. Minzayar Oo is an internationally renowned, award winning photojournalist, whose work is published widely and has been recognised by some of the world’s most important journalism awards.
The pair were detained more than a week ago in Cox’s Bazar, where around 400,000 Rohingya have sought refuge since August from the fresh violence in Myanmar’s Rakhine state.
Their lawyer told AFP that they were charged with “false impersonation” and providing “false information” after police accused them of using the cover of tourist visas to enter the country, instead of journalist visas.
Cox’s Bazar police station Officer-in-Charge (OC) Ranjit Kumar Barua said the pair were also “primarily accused of espionage.”
“They were collecting information on the Rohingya for Myanmar,” he said.
The Committee to Protect Journalists (CPJ) said it was unable to get comments regarding the matter from the Cox’s Bazar police immediately. Calls to Ranjit Barua were unanswered, and police did not respond to email promptly.
China vs the U.S.: When it comes to caring about the environment, they’re both hit and miss
Who really cares about the environment – China or the U.S.? That was the question posed to two experts in the field of environment – and the answer was a little more complicated.
Professor Robert Gottlieb, founder and former Director of the Urban and Environmental Policy Institute at Occidental College in Los Angeles, told guests at the September 12 club lunch that both countries displayed positive and negative attitudes towards the environment.
He said that the Barack Obama administration had eventually paid more attention to environmental policy creation following years of rolling back of environmental policies under previous presidents. A robust social movement in America had done much to pressure the government on the issue of the environment. However, Obama’s work that was largely undone after Donald Trump was elected president, he added.
Left to right: Simon Ng, Professor Robert Gottlieb, FCC hosts Enda Curran and Victor Mallet. Photo: Sarah Graham/FCC“By the time President Obama was elected, the notion of environment as a priority issue really receded despite Obama’s own statements and the interest of those in congress who thought that environment was still a critical issue. In the 2012 election for example climate did not come up in the course of the election between Romney and Obama, but that changed partly because resistance in congress and in the last two years of the Obama administration there was a reconnection in the importance and significance of environment in areas such as air and climate and food thanks to Michelle Obama, the president’s wife, who made the idea of changes around food central to her agenda and subsequently her husband’s. But that didn’t last.”
Professor Gottlieb said that the election of Trump “and some critical appointments made that were significantly hostile to environmental issues” had seen a rolling back of policies: “Scott Pruitt (Environmental Protection Agency Administrator in the U.S.) came into office with an agenda to essentially dismantle both the agency and a wide range of environmental policies with the support of the president which culminated in the decision to begin a process of pulling out of the Paris Accord.”
He concluded: “Does the US care about environment? Yes and no. It does care when you think about citizen movements, it does care when you think about the level of resistance among certain policy makers particularly at the local and state level. And ultimately it does care in terms of wanting to sustain the changes that have been made since the 1970s and move it to the next level. But the answer is no when you come to the President and his head of EPA, the head of the energy department, head of the transportation departments who are actively hostile to this kind of environmental policy system that has been created since 1970 and doing their best to at least resist any further development if not pull it back.”
On China, Professor Gottlieb said it was almost in a reverse process to the United States: “In 2009 at the Copenhagen meeting China’s role was not hostile to but not willing to step up to the plate and in issues such as dealing with air quality, dealing with water quality, you had not necessarily resistance to the idea of the environment being important and crucial but it was not high on the agenda. High on the agenda was development, urbanisation, marketisation – this was the strategic direction of the government.”
He added that this situation has begun to change as China realised that environmental issues have a powerful economic impact and undercut some of the development strategies that have developed. “…there is a recognition that China, particularly now, as of 2016, can champion itself as an environmental leader whether it’s climate or any number of issues, particularly transportation shifting towards being the leading manufacturer of electric vehicles.
“But you haven’t seen a full transition. Take the issue of coal – China is committed tons with its new climate perspective to start reducing the level of coal …. used or particularly produced which has all the env impacts that are deeply felt in certain regions of the country. So in the last three years there’s been a very modest reduction in the production of coal for the first time but not a reduction at that same level in terms of the use of coal because you have an increase in the imports of coal.”
In conclusion, he said: “Does China care about the environment? Yes and no. China does care – it’s called the priority of priorities for example around air quality by government officials – but the implementation is uneven and you don’t necessarily have that robust social movement that you did have in the last 60 years in the United States that has created that ability to increase both awareness and the idea that we do care about the environment.”
Simon Ng of the Civic Society in Hong Kong discussed the government’s attitude towards environmental policy making. He said that two months into Carrie Lam’s administration he hoped she would honour the environmental pledges in her manifesto. He said though that other issues affecting the city – housing, education – were likely to take priority over environmental issues.
Mr Ng praised Hongkongers for their awareness of environmental issues and the fact that they were collecting air pollution information that was empowering them to take action and pressure leaders into doing so. He added that Hong Kong was the first city in Asia to tighten vehicle emissions standards. “When it comes to ship emissions Hong Kong is the first city in Asia to regulate ship emissions at city level.”
And he said that although Hong Kong universities are playing a big part in the development of sensors that measure air quality that are lighter, smaller, more sensitive and accurate, the city could do more. “Hong Kong can be a real leader – how come we have to wait until Beijing says ‘OK you should do this’ and we say ‘OK’ and in the next few days we follow?” He said this was bad for the city.
Professor Gottlieb and Mr Ng have written a book together, Global Cities: Urban Environments in Los Angeles, Hong Kong, and China, examining environmental issues in those locations.
Cambodia Daily closure: FCC Hong Kong calls on government to drop charges against proprietors
The Foreign Correspondents’ Club of Hong Kong expresses deep regret over the closure of The Cambodia Daily, which ceased operations on September 4 under government threats of legal action over a tax dispute. The independent newspaper, established in 1993 to provide a foundation of press freedom in an emerging democracy, trained dozens of local journalists and boasts an alumni spread across media outlets around the region and the world. Its demise is a blow to press freedom and diversity.
As the Overseas Press Club of Cambodia has noted, the government calculated a huge tax bill without referring to The Cambodia Daily’s books, and gave no opportunity for the newspaper to appeal or negotiate. Moreover, the Tax Department has reportedly filed criminal charges against its founder and two directors that could see them jailed for six years.
The episode shows how quickly a government can use its powers to silence the press, particularly smaller local independent publications lacking in financial means and international reach.
The FCCHK calls on the Cambodian government to drop any criminal charges against the publishers and seek a fair resolution of the tax dispute with The Cambodia Daily. It also urges the government to refrain from any other actions that undermine press freedom in the country, bearing in mind the benefits that a robust media environment serves in fostering democracy and promoting transparency.
The Cambodia Daily, whose motto was “All the News Without Fear or Favor”, sought to be a voice for the voiceless. Its abrupt closure after a quarter of a century shows that press freedom cannot be taken for granted.
