Euromoney, August 2016
Euromoney meets China Construction Bank chairman Wang Hongzhang in a Beijing boardroom dominated by a vast tapestry of the Great Wall of China. It is a symbol of longevity and permanence in a place that has seen enormous change, with much more to come.
Wang understands more than most just how dramatically the sands can shift in his country. Born in July 1954, five years after Mao announced the formation of the People’s Republic of China, at 17 he became a ‘sent-down youth’, the euphemistic term for young people during the Cultural Revolution who were sent, willingly or otherwise, to work in rural areas.
His time in the Communist Party – he joined in 1974 and became an alternate member of the 18th Central Committee of the Communist Party of China in 2012 – has seen the leaderships of Mao, Hua Guofeng, Deng Xiaoping, Jiang Zemin, Hu Jintao and now Xi Jinping. He knows all about change.
That sort of long-term view is useful for the head of a big-four Chinese bank – a group, which though it appears impregnable, has many challenges ahead. CCB was founded the year Wang was born and has seen just as much change as he has, growing from a domestic state bank to an internationally listed heavyweight, the second largest in the world by market capitalization. In 2005, it became the first Chinese bank to be listed in Hong Kong. It has seen Bank of America come and go as a large shareholder and has expanded worldwide.
Now it faces challenges: China is slowing, its economic model changing. There are going to be casualties, and Chinese banks have exposure to many of them. CLSA’s head of China and Hong Kong strategy, Francis Cheung, speaks of a “bad debt epidemic”, arguing that “NPLs will worsen with the slowing economy, but the government does not have a comprehensive plan.”