Global economic environment presents unprecedented challenges, opportunities: Bank of China VP

Although global economic and political conditions have undergone "profound changes" in recent years, Bank of China's Executive Vice President Sun Yu believed the high levels of uncertainty might also help generate unprecedented business opportunities.

Speaking at a China Chamber of Commerce in Australia event in Sydney on Tuesday evening, the financial leader outlined how increasing volatility is becoming the "new normal" for banks around the world.

"Though it is summer in Sydney, I'm sure everyone can feel the winter chill of the global economy," he said. "Against the backdrop of great changes, the world's global financial institutions are facing many challenges."

Among them, he outlined, are extremely low interest rates, a dramatic slowdown in the global economy, increased financial market volatility and a 22-year high in economic uncertainty.

"Over the past decade, central banks have continued to flood markets with liquidity, but recovery in the real economy has remained weak, leading to massive disorderly flows of money around the world," Sun explained.

"Cross border capital flows have become shorter term and riskier, with short-term capital accounting for nearly 80 percent of total capital flows in the first half of this year."

"Frequent cross-border short term capital flows have led to some fluctuations in the exchange rate, interest rate, stocks and other asset prices, exacerbating financial market volatility."

With economies around the world hampered largely by a slowdown in international trade brought on by a rise in protectionist policies, the Bank of China predicts the global economic growth rate for 2019 will be just 2.6 percent -- the lowest level since the global financial crisis.

But according to Sun, a new run of scientific and technological revolution led by China, might soon provide financial institutions and the global economy with some much-needed momentum.

"New technologies are profoundly reshaping the finance industry," he said.

"Big Data, and Artificial Intelligence are all being fully applied in areas such as investment consulting, intelligent marketing and risk prevention control, helping financial institutions improve their service quality and efficiency."

On top of this, Sun said, China's financial sector is opening up to the world like never before, bringing historic opportunities to global financial institutions.

Expected to become the largest consumer market in the world, China's household wealth rose from 3.7 trillion U.S. dollars in 2000 to 51.9 trillion U.S. dollars in 2018.

Across the rest of the Asia-Pacific region, economic growth rates have also outperform the rest of the world.

"A month ago, after seven years of negotiations, the Regional Comprehensive Economic Partnership (RCEP) concluded its final negotiations and both China and Australia have joined the pact," Sun said.

"RCEP will strongly boost economic cooperation in the Asia Pacific region, not only re-energizing the globalization process, but also providing great opportunity for financial institutions to expand their business."

"The Bank of China is willing to join together with Australian financial institutions and friends from all walks of life, to seize the opportunities, meet new challenges, to achieve mutual, beneficial and win-win results, and ultimately deepen economic trade and financial cooperation between China and Australia," he said.

Source: China ASEAN Business Council