Bankers and regulators yesterday painted a challenging picture for the global economy but stressed that many aspects would have a resounding impact in the next few decades if properly handled.
Addressing the Asia Global Dialogue, the annual forum of the Fung Global Institute, HSBC chief executive Stuart Gulliver (pictured) said the euro zone lacked four vital elements to keep it together.
These, according to him, are: a Europe-wide deposit insurance provided by the European Banking Authority in euros, to ease concerns on bank solvency and currency value; a European version of the American Troubled Asset Relief Programme (TARP) to help recapitalise banks, supported by a permanent rescue fund to succeed the temporary European Financial Stability Facility (EFSF); a joint euro bond, with the money going to the troubled nations so that they do not need to tap global capital markets when in trouble; and a stronger fiscal union.
But, he said, 'there is no evidence of the political will necessary to make this happen ... in particular from the stronger countries, all of whom will lose out massively should the euro zone eventually collapse'.
Gulliver also sees red flags in China, including labour shortages resulting from an ageing population. In Shanghai, for example, 25 per cent of the population is over 60. By 2050, more than a third of the country's population, or about 450 million people, would be over 60. Policymakers also face a bumpy road as they grapple with social inequality, and try to rebalance the economy and protect the environment, as set out in its 12th five-year plan.
Speaking at the same forum, Liu Mingkang, former chairman of the China Banking Regulatory Commission, said China made the most homes from 2006 to 2010, adding 7.42 billion square metres in housing space during the time.