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EntEr thE Dragon


China is well on its way to becoming the world’s largest economy, but there are still plenty of opportunities for the relatively tiny Channel Islands, as Dave Waller discovers


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LIFE is really simple, but we insist on making it complicated.” So reasoned Confucius, the great Chinese philosopher. He may have taken a different tack if


he was a modern investor trying to understand China: the picture there can be nothing short of mind-boggling for the gwailo – ‘ghost man’ or Westerner – looking in. Modern China paints a messy picture, never


less than dramatic. On the one hand is its incredible rise to global power, marked by phenomenal growth and limitless opportunity, and now it’s flexing its financial muscle beyond its borders to snap up investments worldwide. And it has weathered the economic crisis better than much of the West. No surprise then that British giants like Tesco have rushed to kneel at China’s table. But there is a darker story to the Communist


state – one that involves tales of corruption, human rights abuses, and closing out foreign investors. Judging by the recent trials of Google and Rio Tinto, a move into China can serve to invite trouble. Yet there are clear truths among the contradictions: if a company wishes to consider itself truly global, it can’t ignore the superpower. And for financial-services jurisdictions, the country offers vast opportunity – all that new wealth has to go somewhere. You don’t have to be Confucius to work that out. The good news for the Channel Islands


is that their financial communities have been keen students. Jersey Finance has sent regular delegations to China since 2005 to develop an understanding of Chinese culture and sound out the needs of potential clients there. And in October last year, it joined several of the


jurisdiction’s key law firms and accountants in setting up a Hong Kong office. “Having been traditionally focused on the


UK and Europe, it’s time for Jersey to reach out to the Far East and capture the growth opportunities there,” says Shanghai-born Zhaoan Li, who heads up Jersey Finance’s Far Eastern office. Li is suitably bullish about Jersey’s chances. She points to Rusal, which this year became


the first Jersey-incorporated company to list on the Hong Kong Stock Exchange. Li says the opportunity doesn’t end there. “Jersey will be an attractive route for European companies moving into China, and for the Chinese heading into Europe,” she says. “The Chinese have massive sovereign wealth funds, and are investing in things like overseas M&As. And there could be huge demand for trusts and foundations given all the private wealth arising from China’s growth.”


on the up That growth has been phenomenal. Anyone who missed it must have been particularly deep in meditation. China’s GDP has grown at an annual rate of 9.8 per cent since 1979, when it opened its doors and began fashioning its curious hybrid of communism and capitalism – where a heavy- handed state gave people just enough room to get on with becoming stinking rich. When the recent economic crisis hit, many


expected China’s export-led, state-run machine to suffer. In fact it has emerged strong from the turmoil, using its vast foreign currency reserves to roll out a $585bn spending package, and ordering banks to pump out credit. Exports have rebounded strongly, and Beijing is now busy slowing its public spending growth. China’s economy grew at an


June/July 2010 businesslife.je 17





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