Two forces fuel the growth of financial services. First, the growth of household income leads to demand for basic banking then saving and pension products. This in turn drives the growth of commercial banks and institutional savings businesses like pension funds, insurance companies and mutual funds.
Second, the growth of the corporate sector drives the demand for transactional banking (including foreign exchange where there is international trade), raising of capital (loans and securities) and risk management (derivatives and insurance). This boosts both commercial and investment banking.
Both of these forces are at work in Asia and especially in China, where the next five year plan puts priority on personal consumption growth, especially for lower income households. So one should expect rapid growth in financial services in China, as long as economic growth continues (it’s currently slowing down because of the fight against inflation). A speaker on the MFin from JPMorgan recently showed us that assets under management (AUM) are much higher in Europe and North America than in Asia but are growing slowly because the population is relatively old. In Asia, AUM are low but likely to grow much faster, at least until the Chinese population also matures, which is not that far away.
So there is a boom in financial sector jobs in China. Given the much weaker prospects for growth in the west, this naturally attracts western workers. But the message from my recent trip to China is that most of these new jobs will go to Mandarin speakers. And most of those will be Chinese nationals.
The worldwide growth of English as a business language has been remarkable. It made it seem that a good command of English would be sufficient to work in any major global city. China is refusing to go along with this. If you want to do business in China you must speak Mandarin. This is difficult but not impossible if you’re not born Chinese. A friend of mine comes from Dorset in England, via Eton and Oxford, andnow works very successfully in China for a well known global management consultancy, having learnt fluent Mandarin. (It helps that he has a Taiwanese wife – and I’m not sure what the causation of events was here).
Even in Hong Kong, many jobs now require fluent Mandarin. This is less the case in the markets but even there it may become so as business shifts to Shanghai and Shenzhen, which is happening quite quickly under the influence of the internationalisation of the RMB. I heard of Hong Kong residents taking intensive Mandarin lessons to brush up their language, where their first language is Cantonese.
Many Chinese financial institutions remain in the public sector or at least are heavily influenced by government. These typically will recruit only people who were born in China. Even those who left and want to return may not be welcomed immediately. This effect is less strong in the institutions that are not directly owned by the government but the boundary is not at all clear to visitors like me.
The winner from this may be Singapore, which continues to welcome talented people from any background. Even there a second Asian language will be helpful for one’s career but it need not be Chinese.