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Interview with Sir David Wright, Vice-Chairman, Barclays Capital, on speculation over the Renminbi.
 China's currency is under pressure and may be revalued. Exactly when and by how much do you think it will be revalued, and what will the implications be?
This is not the first time there has been speculation about the future of an Asian currency at a time of rapid economic growth and penetration of overseas markets. It happened in the 1980s over the Yen.
These are not matters to be handled by megaphone diplomacy. They are too subtle and complex for that as we saw in the 1980s. What is important is that the Chinese authorities (both the Finance Ministry and the Central Bank) should be integrated into the discussion and exchanges of those who watch over the management of the world's five or six leading currencies in the forum of well-established international institutions. It is in those forums that the future management of the Renminbi should be weighed up and the many interlocking implications considered.
The theme of the World Economic Forum on East Asia is 'Creating a New Agenda for Asian Integration'. What are the new issues that need to be addressed by the region's institutions?
| There are a host of new issues and I think that they have been well identified in the programme contents for the Forum. The contents span all the current major challenges, both political as well as economic and financial. The first issues I'd address is how the idea of "Chindia" can act as a global economic model and what lessons can be learned for ASEAN, particularly what relationships exist between the "Chindia" and the Japanese and Korean models. |  |
"What is important is that the Chinese authorities (both the Finance Ministry and the Central Bank) should be integrated into the discussion."
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Secondly I'd look at what are the messages for financial markets, for Asian financial integration and for financing the demands of ageing societies in Asia. Thirdly, in the political field, what is the anticipated direction of regional integration in East Asia.
How is the business model of Barclays Capital changing, given the rise of China and India?
Barclays as a Group is committed to expanding its overseas earnings and to growing that business to around 50% of total earnings, with our existing portfolio of businesses. To do that is going to mean growing our business in Asia, especially in its three main markets Japan, China and India.
In terms of China and India, this means expanding our capital involvement there. The long term China and India story is very strong and you will see us continue to grow our business in these markets, as we have done by being involved in every convertible bond issue in India since this asset class was opened up last year; while in China, we have boosted our presence by upgrading our representative office to full branch status last year. Our senior staff are spending an increasing amount of their time in these markets.
Additionally and indirectly of course the rise of the potential of markets in China and India has done a good deal to focus attention on the potential of markets in the region in general.
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