On May 10, Columbia Business School and the Jerome A. Chazen Institute of International Business welcomed Frank Tang '94, a senior managing director at Temasek Holdings, to deliver the fourth lecture in the Sir Gordon Wu Distinguished Speaker Forum. A capacity crowd of students, faculty members, alumni and friends of Columbia Business School gathered at the Columbia Club in midtown Manhattan to hear Mr. Tang speak about the effects of recent market and economic reforms on foreign investment opportunities in China.
Temasek Holdings is among the largest overseas investors in China, having invested more than U.S.$5.1 billion in mainland Chinese companies since 2004. Sectors in which it has been active include financial services, retail, consumer products, real estate, transportation and alternative energy.
The Sir Gordon Wu Distinguished Speaker Forum at Columbia Business School promotes the academic study and professional understanding of China's economy and business practices by bringing recognized business leaders to New York to share their perspectives.
While there is general consensus today regarding China's emergence as a global manufacturing power, Frank Tang '94 believes that recent macroeconomic developments, demographic shifts and financial market reforms in China will fuel much of the future growth over the next decade and transform the country into a true global economic power.
China embraced market reforms starting in the early 1980s, dismantling certain elements of its socialist, macroplanning apparatus. Subsequent GDP growth was volatile, largely because of this dismantling coupled with the lack of a strong central banking authority and effective regulatory mechanisms. Since 2000, however, improved central banking oversight has helped stabilize GDP growth, now projected at 8 to10 percent per year for the foreseeable future. Mr. Tang believes that steady growth will be critically important for current investors in China and for those seeking to enter the Chinese market.
Furthermore, Mr. Tang explained that the ownership structure of Chinese companies has changed in recent years, with significant implications for investors. Many of China's state-owned enterprises have been converted to privately owned enterprises, leading to more efficient deployment of capital, a stronger focus on growth and potentially larger returns for investors. In fact, from 1999 onward, privately owned enterprises have accounted for more than 50 percent of China's total industrial output.
China is also undergoing rapid urbanization, and the country’s agricultural economy is quickly being supplanted by an industrialized and concentrated urban economy. Although China’s 40 percent urbanization ratio lags behind those of developed nations, which have urbanization ratios of 70 percent to 80 percent, Mr. Tang stated that the rapid growth of urbanization in China will lead to higher living standards and quality of life for urban Chinese, resulting in higher levels of GDP. Mr. Tang noted that urbanization will directly impact investments in infrastructure, as growing urban populations will require improved healthcare, education and transportation.