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The financial crisis rocking Western banks is an opportunity for China to take investment stakes in some of the world's leading financial institutions, a leading Chinese economist has claimed.
But Professor Shujie Yao, from the School of Contemporary Chinese Studies at The University of Nottingham, has warned that it would be a mistake for China to take majority control of Western banks.
He said: "China has at least $200bn in sovereign wealth funds and this financial crisis could be seen as a huge long term investment opportunity. China has the strength to bail out banks hit by the credit crisis and, in conjunction with the activities of the Central Banks in the UK, US and beyond, this could help bring lasting stability to the markets.
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“But China is unlikely to buy an institution like Morgan Stanley or Goldman Sachs outright because it doesn't have the experience and expertise to manage them.”
Professor Yao added: “Our research has highlighted some of the deficiencies in Chinese banks — they are not as efficient as their Western counterparts, though arguably, they are looking a lot more secure at the moment! There is a strong case for China taking a 20 per cent stake in some of these banks and board level representation, and I am sure that that is a strategy that is being considered in Beijing."
Professor Shujie Yao is one of China's most respected economists. He is head of the School of Contemporary Chinese Studies at The University of Nottingham, the only University centre in the country dedicated to the study of contemporary China. The School is home to some of the world's leading China experts.
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Notes to editors:
The University of Nottingham is ranked in the UK's Top 10 and the World's Top 70 universities by the Shanghai Jiao Tong (SJTU) and Times Higher (THE) World University Rankings.
It provides innovative and top quality teaching, undertakes world-changing research, and attracts talented staff and students from 150 nations. Described by The Times as Britain's "only truly global university", it has invested continuously in award-winning campuses in the United Kingdom, China and Malaysia.
Twice since 2003 its research and teaching academics have won Nobel Prizes. The University has won the Queen's Award for Enterprise in both 2006 (International Trade) and 2007 (Innovation — School of Pharmacy).
Its students are much in demand from 'blue-chip' employers. Winners of Students in Free Enterprise for four years in succession, and current holder of UK Graduate of the Year, they are accomplished artists, scientists, engineers, entrepreneurs, innovators and fundraisers. Nottingham graduates consistently excel in business, the media, the arts and sport. Undergraduate and postgraduate degree completion rates are amongst the highest in the United Kingdom.