SPEECH BY CHAIRMAN GUO SHUQING

CHINA CONSTRUCTION BANK (LONDON) LIMITED – LAUNCH DINNER, MONDAY 1 JUNE 2009

Minister Pearson, Ambassador Fu, My Lords, Ladies and Gentlemen:

May I say what a great pleasure it is for me to be able to address such a distinguished audience at this dinner to mark the inauguration of China Construction Bank’s UK subsidiary.  Using this opportunity, I would also like to thank the FSA, the City of London Corporation, other banking peers, enterprises and all our friends in the community who have helped and supported CCB London during its preparation period.

Today for CCB is not only historic but also of dramatic significance.  Twenty-five years ago when we moved out of the Ministry of Finance, it was very difficult to find an office-building, so finally we settled down on a chicken farm in the western suburb of Beijing as the location of our new headquarters.  Flash forward and today CCB is opening its subsidiary in London, the most prestigious and dynamic financial center in the world.  We could only marvel at the pace of transformation in such a short time span. The two years we spent on the pads of the chicken farm launched CCB on its way to become China’s leading bank and a green bank as well. Since then, we have become more and more environment-friendly and animal-friendly. We also started with Green Consumption and Ethical Consumption, and probably get immune to Bird Flu and Swine Flu as well.

London, as the world’s leading financial centre, has always represented CCB’s main targeted market in our plans for overseas expansion. With its developed financial market infrastructure, London is a center for information and world-class talents. Establishing our presence here will enable CCB to reap significant benefits through keeping abreast of the international market, grasping the best international practices and technology, improving the quality of our service to global customers and nourishing a team of high-caliber professionals. I believe our London subsidiary will be the new launching pad for CCB on its way to emerge as a global institution.

The United Kingdom is one of the largest economies in the world, which is especially impressive given its population and size. More importantly, UK has led the world in the transition from agricultural to industrial society and from manufacturing-dominant to service-dominant economy.  In my view, UK is one of the world’s earliest innovation-driven economies and its contribution to the modern civilization is comparable to China’s contribution to the ancient world.    

Today, UK stands as one of the world’s most important sources and destinations of capital and centers of international trade.  It boasts of world-class institutions in technology, education, information services, finance, shipping and other modern intermediaries.  With world’s largest academic publishing houses and the best cultural & creative industry, UK is also one of the few countries that can earn a living just through exports of language, literature and music.  In contrast, we export mainly textile and garment, coke, steel, cement, all manual- labor-intensive and environmentally high-cost goods.

Sino-UK trade relationship has a long history, which can be traced back to the tea, spice and silk trade in the 17th century.  As the first important western power to recognize People’s Republic of China, the UK has made great contributions to the normalization of trade relations between China and the western world, starting with an “ice-breaking” trip by Group 48 in the 1950s.  Now China and the UK have established comprehensive strategic partnership with bilateral trade reaching US$ 40 billion in 2008.  The two countries are also witnessing deepening ties through education and cultural exchange as the UK has become one of the most popular destinations for China’s overseas students and tourists.

China Construction Bank has its origin in capital investment financing.  Today we have gone far beyond “engineering and construction”, enjoying China’s best comprehensive banking capability in the domestic market, with leading positions in wholesale banking, retail banking and investment banking.  CCB is widely recognized as China’s major lender in infrastructure and mortgage businesses.  CCB also enjoys the world’s largest number of ATMs among banks.  For years, we have maintained the lowest NPL ratio, the highest interest margin and the most rapid growth of fee-based income among China’s Big 4 banks.  In 2008, CCB ranked No. 1 among the world’s largest banks by ROA and ROE, and No. 2 by market capitalization and net profit.

However, CCB still lags far behind world-class standards in terms of professional operations and refined management, and have a great deal to learn from our peers in developed markets including the UK.  Although the UK’s financial industry is facing temporary difficulties under the current global financial crisis, we believe the world economy will rebound eventually and the UK’s banking industry will rise to the challenge and weather the current downturn.  The opening of CCB London today reflects our confidence in the UK economy and the financial sector.

As the most dynamic emerging economy in the world, China has been the largest capital exporter for several years and is likely to become the largest commodity exporter this year. However, China is still a developing country.  According to the IMF, China’s 2008 GDP per capita was only one-thirteenth of that of the UK, and only one-sixth even adjusted by Purchasing Power Parity.  China and the UK are two complimentary nations with great potentials in trade, financial and cultural cooperation and exchanges.  Like many British tourists who are attracted to China, a lot of Chinese people also wish to visit the UK in person, which they have already come to know well from books and movies.  Today, the number of Chinese people who speak English may be larger than the entire population of the UK, which is just one illustration of the huge potential for future Sino-UK trade and financial relationships. But of course, we are still not so fluent in English for everyone. Some people claim that they speak Queen’s English, or BBC English. And quite a few people are believed to be speaking Cambridge English. I told them there was no Cambridge English but only Oxford English and I was refuted. Those people produced such hard weapons as “Cambridge Certificate of Proficiency in English”. It seems that the influence of English teaching and training of Oxford could not be compared with that of Cambridge. At least it is so in China.

As the development of China Construction Bank London progresses, it will have every support from our Head Office in Beijing.  Meanwhile, I believe CCB London will provide customers with quality services in a manner that is prudent and compliant with local laws and regulations.  We undertake to regulators and peers that CCB London will place utmost importance on risk management, that we will not promote any product we don’t understand, nor engage in any transaction that is over-complex, and that we will not be market-share driven. “When the music plays, everybody goes to dance.” This saying does not apply to us. Just like a farmer who comes to a great palace, when music plays, we will not go to dance, because we don’t know how to manage that. But we will do exemplarily in trustworthiness and legal compliance.

Once again, we are extremely grateful to so many people who have worked so hard to enable us to set up here in London, and we look forward very much to your support in the future.

Thank you all again for coming today!