Monday, June 4, 2012 A15

Dark horse

Michael Chugani says Stamp of success suspicions about Leung Chun-ying being a closet Communist Party member Anita Fung says Hong Kong’s depth of experience and could still come back to haunt him liquidity mean it is destined to continue playing the lead role in the renminbi’s global rise, even with the here are those who still can’t shake off the development of other offshore hubs such as suspicion that incoming chief executive Leung TChun-ying is a closet communist. They see him as a Trojan horse planted by the central government rrespective of location, the renminbi’s in- to mould us into being more like the motherland. It ternational rise will be a wide-ranging all seems a bit far-fetched, but believers say Leung’s event. It will transcend national borders. actions since winning the election more than confirm It will exert a major impact on global their suspicion. They point to his high-profile visit to trade and investment flows. It will influ- ’s liaison office in Hong Kong the day after his Ience how businesses, investors and regulatory victory, his hiring of a former Communist Youth functions operate in the decades to come. League member, and his reported choice of Florence Based on the economic road map outlined Hui Hiu-fai, who has close mainland ties, as head of by China’s policymakers, we expect that the the new culture bureau. renminbi will become a global trade currency, a It wasn’t that long ago when even a hint of global investment currency and finally the next communist leanings would sink anyone aspiring to global reserve currency. The recent announce- be our top leader. Just a year or so ago, Leung ranked ment that China and Japan will start direct trad- poorly in popularity polls on the belief that he was an ing of renminbi and yen to boost trade ties is underground communist. Despite his denials, few consistent with this master plan. Direct trading felt at the time that he could overcome his of the currencies between China and Japan communist baggage to become chief executive. Yet demonstrates not only the growing clout of the he is now our leader-in-waiting. renminbi, but further reinforces the emergence To understand why so many Hongkongers have of the former on the international stage. embraced someone who not so long ago carried a Measurable progress has already been communist stigma, we have to understand the deep made, irrespective of this announcement. Last desire for change in our society. People, mostly the year alone, about 9 per cent of China’s global grass roots, have long felt that Hong Kong has been trade was settled in renminbi (total trade for heading the wrong way, tilted in that direction by 2011was over US$3.5 trillion). By 2015, over half locked-in societal injustice that favoured the of China’s trade with emerging markets (US$2 privileged. They had no vote but faced the prospect of trillion) is likely to be settled in renminbi. But as either Leung or Henry Tang Ying-yen becoming the interest in the renminbi will only intensify, the next chief executive. currency will require deep global support and a Leung had worked hard to reinvent himself by broad offshore network and infrastructure. reaching out to the grass roots with promises of Policymakers, financial institutions and change that would make society fairer. The people businesses acknowledge that in order for the saw Tang as someone from the privileged class who renminbi to become a major component on would preserve the old order. Scandals involving his the international stage, its offshore develop- illegal basement and Chief Executive Donald Tsang ment must move beyond Hong Kong. Yam-kuen’s hobnobbing with tycoons only helped Last month, representatives from govern- confirm this in the public mind. So they backed the ment and finance converged on the city for the suspected communist rather than the devil they Hong Kong-London Forum to discuss this knew. The message was clear: so what if he is a future development, to enhance the flow of the liberalised by authorities, has increased in its in Hong Kong rose 87 per cent year-on-year ship role in facilitating renminbi payments in communist, as long as he can bust up the old order. yuan across borders and to explore synergies by Hong Kong from 369.2 billion yuan (HK$451.7 to 588.5 billion yuan. These deposits did decline Europe, which now account for roughly 7 per But that doesn’t mean Leung is rid of his improving links between Hong Kong and billion) in 2010 to 1.9 trillion in 2011, based on by 2.1 per cent month-on-month in March this cent of global renminbi payments according to communist bogeyman. His opponents still see much London. Monetary Authority figures. In the first quarter year but we believe this is largely due to the our estimates. mileage in playing the communist card against him. While this is a positive development for the of this year, 571.2 billion yuan has been settled. opening of additional renminbi channels and Additionally, establishing a second offshore Legislators played the card just last week by grilling renminbi internationally, many are asking Hong Kong’s offshore renminbi market also the onset of more normalised growth patterns. renminbi hub will leverage London’s standing Leung’s top transition aide, Fanny Law Fan Chiu-fun, what the forum will mean for Hong Kong’s provides an unmatched depth of capital mar- Another solid example of the depth of Hong as the largest and most liquid foreign exchange on suspicions that Leung was letting Beijing decide status as the leading offshore renminbi centre. kets and financing products, including yuan- Kong’s renminbi liquidity pool is found in the market globally. The City of London estimates the make-up of his new team. Law’s fudging only Understandably, some market commentators denominated fixed income and equity prod- rapidly emerging offshore renminbi bond (dim that roughly 26 per cent of the global offshore fuelled the suspicion. And, for the first time, the are concerned that the potential establishment ucts, yuan loans and overdrafts. sum) market. In 2011, gross issuance of dim sum renminbi spot market is already in London. Communist Party will be a target at the annual July 1 of London’s offshore business would be to the From a foreign exchange perspective, daily bonds was 189.3 billion yuan, triple the 2010 Furthermore, expanding the range of off- protest march. President Hu Jintao will be detriment of Hong Kong’s leading status. turnover last year was around 1 billion yuan on figure. At the end of this April, gross issuance shore renminbi markets will improve pricing here for the handover anniversary celebrations but This could not be further from the truth. the spot market and 1.8 billion yuan on the for- totalled about 100 billion yuan, on track to hit efficiency and drive product development. De- the real target is Leung, who assumes office that day. London’s development as an offshore ward market. our end-of-year target of between 260 billion veloping a broader renminbi product range will Leung is fighting fire with fire. He is playing the renminbi hub would only complement Hong Second, Hong Kong is easily the largest and 310 billion yuan. rest heavily on Hong Kong-based experience, public opinion card against his critics, who are, Kong’s position. Hong Kong’s leadership posi- renminbi market outside mainland China, So how does this compare with London? As and London has already accepted its willing- likewise, using public opinion to play the communist tion will not be threatened, particularly as no measured by liquidity. In 2011, renminbi depos- of April, renminbi deposits in London stood at ness to learn from Hong Kong’s expertise. card against him. Neither of Leung’s two post- other market has received the level of endorse- 109 billion yuan, but are forecast to grow rapid- In other words, global infrastructure for the handover predecessors competed with opponents for ment from the Chinese government as Hong ly. However, London’s retail renminbi market is renminbi will only be strengthened by bilateral hearts and minds. It’s a high-stakes gamble for him. Kong has through policy directives such as the not expected to ever approach the size of Hong agreements such as the Hong Kong-London Public opinion destroyed Tang. And it has left Tsang’s 12th five-year plan. Kong’s, given the latter’s close proximity to Forum. As renminbi internationalisation will legacy in tatters. If Leung does anything at all that Hong Kong stands alone as the world’s pre- No other market has mainland China. be a staged process, development of London suggests he really is the Trojan horse some suspect, mier offshore renminbi centre for a number of While this base is incomparable to Hong will complement, not challenge, Hong Kong’s you can be sure his communist ghost will spring right reasons. First, the market is the most developed received the level of Kong, London will serve in other areas as a crit- leading status. back to haunt him. globally in terms of the offshore renminbi endorsement from ical component in the overall picture of products and services available. For example, renminbi internationalisation. For example, Anita Fung is chief executive officer, Michael Chugani is a columnist and TV show host. renminbi trade settlement, one of the first areas …[Beijing] as Hong Kong London has and will continue to play a leader- Hong Kong, of HSBC [email protected] Voices from June 4 echo in Crossing borders to build Numbers on health-care today’s fight for basic rights the leaders of tomorrow aid add up to great gains Carol Christ says exposure to different cultures is Jeffrey Sachs says spending on disease eradication Lijia Zhang says Tiananmen-style calls for change abound without political reform essential in helping women succeed at the top has clearly saved and improved millions of lives

was still a rocket factory girl in made the decision didn’t consider any time soon. As part of the party s president of the largest was Ginling College in he critics of foreign aid are The expanded funding allowed Nanjing when the the wishes of millions; those who apparatus, they know that women’s college in the US, I , a link that lasted more than wrong. A growing flood of big campaigns against Aids, TB Iunprecedented democratic went on hunger strike, those who reopening the old wound may lead A am encouraged by the three decades. In some years, Tdata shows that death rates and malaria; a major scaling up of movement swept the nation in took food to the protesters and those to more questions and criticism, growing recognition – around the Smith College and its alumnae in many poor countries are falling safe childbirth; and increased spring 1989. On May 28, I organised who marched in the rain. damaging the regime’s credibility. In world – that educated women are provided an estimated one-quarter sharply, and that aid-supported vaccine coverage, including the a big demonstration among fellow The official verdict labelled the the long run, however, the perils of the hope of our nations. of Ginling’s annual budget. programmes for health care have near-eradication of polio. workers because I believed that we event “counter-revolutionary not giving people a voice are greater. International understanding is Developing an international played a key role. Aid works; it The public-health successes ought to have a say in how we were turmoil”. To this day, the subject is There were many, complex key to that education. As countries understanding within students saves lives. can now be seen on many fronts. governed. A week later, at the taboo. Information about it is even reasons for the rise of the 1989 pro- across Asia recognise the need to remains critical today. This year, One of the newest studies, by Around 12 million children under darkest hour on June 4, the troops more strictly controlled than that democracy movement. People were broaden the exposure of their Smith stepped forward to serve as Gabriel Demombynes and Sofia five died in 1990. By 2010, this had opened fire on their own people. concerning the Cultural Revolution. dissatisfied with growing corruption students – women and men – to the US academic planning partner Trommlerova, shows that Kenya’s declined to around 7.6 million – Chen Xitong , Beijing’s The authorities have tried to erase and soaring inflation, and the lack of other cultures and intellectual for the establishment of a new infant mortality (deaths under the still far too high, but definitely an mayor at the time, has described the June 4 from the public memory. personal freedom and outlets for traditions, the potential increases women’s university, in Malaysia, to age of one) has plummeted in historic improvement. Malaria bloody incident as “a regrettable They have not succeeded. Every expression. The students marching for developing future leaders. be known as the Asian Women’s recent years, and attributes a big deaths in children in Africa were tragedy that could have been year, dissidents, intellectuals and towards Tiananmen were like a Throughout their history, Leadership University. It will bring part of the gain to the massive cut from a peak of around one avoided” in a book titled ordinary people – even a former spark thrown on to a pile of dry women’s colleges have had the together the best educational uptake of anti-malaria bed nets. million in 2004 to around 700,000 Conversations with Chen Xitong, soldier involved in the crackdown – wood – soon people from all over the opportunity, privilege and practices of the East and West, a In 2000, Africa was struggling by 2010, and, worldwide, deaths of which has just been published in write petitions to our leaders, calling country joined in, shouting support determination to educate women curriculum based on the ideals of a with three major epidemics. Aids pregnant women almost halved Hong Kong. Chen, regarded as a for a re-evaluation. Those who lost and venting their grievances. of promise from all over the world. liberal arts education, within a was killing more than two million between 1990 and 2010 to 287,000. hardliner in favour of using force, their loved ones demand Last December, the scenes of Today, we see these women vibrant residential learning people each year, and spreading Another US$10-15 billion in was promoted after the crackdown compensation. In an extreme case, protesting farmers in Wukan, leading and serving in every community representing women rapidly. Malaria was surging, and annual aid (that is, roughly US$10- but later disgraced on corruption 73-year-old Ya Weilin killed banners in hand, sparked memories cultural and civic capacity. from diverse backgrounds. tuberculosis was soaring. In 15 more per person in the high- charges. himself recently in Beijing, in protest of 1989 for me. More than ever One key to our success is our As the world becomes addition, hundreds of thousands income world) would enable still Why did Chen, 81, go out of his over his son’s death in the square in today, the Chinese people are aware early commitment to international increasingly “flat”, the challenges of women were dying in childbirth greater progress. way to tell his side of the story now? 1989, according to media reports. of their rights and are willing to fight education. Women’s colleges – faced by nations and higher each year. Unfortunately, at every step, a I’m not sure I totally believe his In the past 23 years, sea changes, for them. Smith, in particular – were among education institutions grow in These interconnected crises chorus of aid sceptics has argued version; it contradicts others’ many positive, have occurred. The In March, Premier Wen Jiabao the first US institutions to depth and urgency. Regardless of prompted action. UN member against the needed help. They accounts. But it is interesting to see authorities have channelled warned that, without recognise the importance of study nationality, students cannot states adopted the Millennium repeatedly claim that the funds will he has betrayed the official line by people’s energy into money- political reforms, a tragedy like the abroad. It was a bold act for Smith succeed in a world they have not Development Goals in September be wasted; that the poor won’t use denouncing the massacre. making. While keeping a tight grip Cultural Revolution may repeat to send a group of young women broadly lived in, and they cannot 2000. Three of the eight goals – anti-malaria bed nets; or take anti- On May 28, 1989, I was inspired on power, they have also gradually itself. Isn’t it the same with the June abroad to Paris in 1925; to Madrid lead across borders they have not reductions in children’s deaths, Aids medicines properly, and so to take action after I watched granted people more personal 4 incident? and Florence in 1930 and 1931; and themselves crossed. Making maternal deaths, and epidemic on. Their vocal antagonism still moving TV images of workers freedom. Yet, at a fundamental level, to Geneva in 1946, to a Europe just progress in addressing societal diseases – focus directly on health. threatens the funding needed to marching in the rain. Although a ordinary citizens are still kept away Lijia Zhang is a Beijing-based beginning to recover from war. issues around the world requires Likewise, the World Health get the job done. manual labourer, I was patriotic and from state affairs. writer, commentator and author Many alumnae helped found intelligent women from many Organisation issued a major call to A decade of significant progress idealistic, like many youth of my Recently, we all watched in of Socialism is Great! A Worker’s schools, colleges and relief nationalities and socioeconomic scale up development assistance in health has proved the sceptics generation. At this critical moment, I amazement as Bo Xilai , the Memoir of the New China movements around the world, backgrounds, who are globally for health. And African leaders took wrong. Aid for health care works – wanted to show my support, hoping bold former party secretary of notably in Asia. In 1913, two educated and prepared to lead. on the challenge of battling the and works magnificently – to save that our leaders would listen. Chongqing , fell from grace, in women leaders, Helen continent’s epidemics. and improve lives. I heard news of the crackdown an echo of Chen’s downfall. It is > CONTACT US Montgomery and Lucy Peabody, Carol T. Christ is president of Smith Donor aid did start to rise on BBC radio. I couldn’t believe it. widely believed he, too, was a victim Agree or disagree with the opinions on this initiated an effort to raise money College, in Northampton, sharply because of these efforts. In Jeffrey D. Sachs is professor of Chen now says the tragedy of a power struggle at the top. page? Write to us at [email protected]. for seven new women’s colleges in Massachusetts, one of the historic 1995, total aid for health care was economics and director of the Earth “stemmed from the internal [power] Few expect the next generation If you have an idea for an opinion article, Asia by pairing them with seven Seven Sisters and one of the largest around US$7.9 billion. By 2010, it Institute at Columbia University. struggle at the top level”. Whoever of leaders to address the June 4 issue email it to [email protected] American sisters. Smith’s partner women’s colleges in the US had grown to US$26.9 billion. Copyright: Project Syndicate