Li Feng, Vice President of HSBC China: The green and low-carbon transition has enhanced the attractiveness of the Chinese market | In the Bo

Reporter Zhang Roaming reported from Shanghai

The 4th China International Import Expo (hereinafter referred to as "CIIE") is underway. During the Expo, a reporter from China Business Daily interviewed Li Feng, Vice President and Chief Customer Officer of HSBC China, on a number of topics such as opening up to the outside world, cross-border trade and green development.

In the interview, Li Feng repeatedly mentioned China's green development opportunities, he said that China's action to promote carbon peaking and carbon neutrality has begun to have a positive impact, the company's survey found that nearly 80% of the overseas companies surveyed believe that China's green and low-carbon transformation has further enhanced the attractiveness of the Chinese market, and more than half of the surveyed companies are planning to provide China with greener and more sustainable products.

China's strong purchasing power provides a broad space for enterprises from all countries to export

China Business Daily: Customs statistics show that from January to September this year, China's imports amounted to 12.78 trillion yuan, an increase of 22.6% year-on-year, and the scale hit a record high. Judging from what you have learned, why can China's import scale reach a new high this year?

Li Feng: China has become the world's second largest import market for 12 consecutive years and has become a major exporter in many overseas markets, highlighting the important position of the Chinese market in the global economy and trade.

With the global economy still affected by the epidemic, China last year became the only major economy in the world to achieve positive economic growth. In the past three quarters, although China's economy has been affected by torrential rains and floods in many places, it has still achieved a high level of positive growth. The advantages of China's economic development make it an important position in the global economy, and China is leading the global economic recovery and promoting the development of world trade.

In addition, as the world's second largest consumer market, China's strong purchasing power of 1.4 billion people provides a broad space for the export of enterprises around the world. China's consumption structure is also escalating, hot spots are emerging in an endless stream, and green business opportunities under China's "double carbon" action and the accelerated development of the digital economy have brought new growth momentum to international trade and investment under the impact of the epidemic. At the same time, Chinese residents' awareness of sustainable consumption is increasing, and green products have become a key development area in the consumer market.

In this regard, we have some data to support it. HSBC released the "Overseas Enterprises Looking at China 2021" report for the Expo, which conducted research on more than 2,000 overseas enterprises in 10 major economic and trade partners in China. According to the survey report, the majority of respondents (91%) believe that Chinese consumers' awareness of sustainable development has increased in the past five years, and more than one-third (37%) of respondents believe that green and low-carbon consumption is a major change in China's consumption trend after the epidemic.

With the rapid recovery of China's economy and the continuous growth of residents' disposable income and sustainable consumption capacity, China's future consumer market has great potential and will inject a steady stream of momentum into global trade and economic recovery.

China's "green" label is favored by international enterprises

China Business Daily: Judging from HSBC's practice, what is the situation of international companies expanding into the Chinese market in the future? What are the opportunities in China that international companies value?

Li Feng: Overseas Companies Look at China 2021 report shows that whether overseas companies have started or plan to invest in China, they see China as a promising market.

Specifically, 87 percent of companies surveyed expect exports and sales to China to grow over the next 12 months; more than half (52 percent) of overseas companies are currently engaged in mergers and acquisitions in China or have plans to do so in the next 12 months; and nearly 60 percent (59 percent) are currently expanding or planning to expand their supply chain presence in China next year.

Our survey found that the opportunities presented by China's "double carbon" initiative, innovation in the digital economy and huge consumption potential are attracting the attention of global businesses. Nearly 80% of the overseas companies surveyed believe that China's green and low-carbon transformation has further enhanced the attractiveness of the Chinese market, with industries such as renewable energy (39%), electric vehicles (38%) and energy-saving products (35%) being the most optimistic about overseas companies. In addition, more than 90% of overseas companies said that China's rapid digitalization has brought better prospects for their Chinese business.

According to our observation, the main reasons why the Chinese market is popular with overseas companies are: China's economic growth resilience, consumer market advantages, mature supply chain system and logistics facilities, policies to encourage technological innovation, and determination to actively address the challenges of climate change.

Although the global economic environment still faces many uncertainties and challenges, one thing is certain, by promoting China-centric growth and investment layout, it will continue to create value for overseas enterprises.

China Business Daily: As China continues to deepen its opening up to the outside world, as an international bank, HSBC believes that there are some areas in China that can be focused on layout?

Li Feng: Under the great changes of the past century, China has unswervingly promoted reform and opening up and continued to fully integrate into the global economic system. As an international bank rooted in China, HSBC's business strategy in the Mainland is highly aligned with China's economic development priorities, and we continue to invest in key areas such as the Guangdong-Hong Kong-Macao Greater Bay Area, the Belt and Road Initiative, green sustainable development and fintech innovation.

Among them, with the deepening of the integrated development of the Greater Bay Area, economic and trade exchanges between the three places have become more frequent, and the demand for cross-border financial services by enterprises and residents has been continuously improved. At the same time, the successive introduction of innovation policies in the Greater Bay Area, including the recent official landing of the "Cross-border Wealth Management Connect" service, has created huge business opportunities for financial institutions in the region. Recently, HSBC officially launched the "Cross-border Wealth Management Connect" service, and we will continue to invest in the business development of the Greater Bay Area and actively grasp the opportunities brought about by the construction of the Bay Area.

In supporting the green and low-carbon transformation of Chinese-funded enterprises, HSBC actively implements the green operating principles and is committed to promoting sustainable financial products and services such as green bonds and green loans, and supporting the green and low-carbon transformation of Chinese issuers through diversified sustainable financial products, including the launch of the first green deposit scheme for corporate customers in foreign banks in June this year. In addition, we have invested nearly 100 million yuan to launch a number of climate change projects to support China to achieve the "double carbon" goal.

The development of ESG will further stimulate market vitality

China Business Daily: In the previous interview, I mentioned the opportunities for green development in China many times. I have noticed that at present, domestic enterprises or financial institutions not only pay attention to green development, but also rise to the aspect of ESG transformation. In foreign countries, ESG (environmental, social and corporate governance) is relatively mature. Can you talk about the current development of ESG in China, and how do foreign-funded enterprises view China's practice of ESG development? What are the opportunities for financial institutions to participate in this process?

Li Feng: In the past few years, China has made great strides in promoting green development, and has led the world in new energy, carbon markets and other fields. China is the world's largest new energy vehicle market, ranking first in the world in terms of production and sales scale for 6 consecutive years, and has also become the world's largest new photovoltaic market for 8 consecutive years.

With the gradual clarification of the domestic carbon neutrality roadmap and the intensive introduction of a series of specific policies, ESG development, as an important driving force to achieve the carbon neutrality goal, will continue to stimulate the vitality of the market, which is of great significance for supporting China's carbon peak and carbon neutral strategic deployment and accelerating the optimization of resource allocation.

China's push to peak carbon and neutrality has begun to have a positive impact, and our survey found that nearly 80% of overseas companies surveyed believe that China's green and low-carbon transition has further enhanced the attractiveness of the Chinese market. They are optimistic about the business opportunities brought about by the implementation of China's "double carbon" goal, and more than half of the companies surveyed are planning to provide China with greener and more sustainable products.

Achieving the "double carbon" goal will require significant financial support, with the UN Intergovernmental Panel on Climate Change (IPCC) report noting that an average of $830 billion in additional investment is expected between now and 2050 to contain global warming within 1.5 degrees Celsius.

The financial industry can play an important role in making up for the funding gap, not only to provide financing for green projects, to promote capital into the field of green industries, but also to effectively allocate financial resources through daily financial decisions.

In addition, with the continuous deepening of the concept of sustainable development in the domestic market, the intensity of international financial cooperation will increase, which will surely attract more funds at home and abroad to enter the domestic ESG investment field. HSBC has rich international practice in ESG investment, and can bring internationally advanced sustainable investment concepts and products to Chinese investors according to local conditions.

(Editor: Meng Qingwei Proofreader: Yan Jingning)