SPEECH AT THE OPENING CEREMONY OF CHINA CONSTRUCTION BANK

NEW YORK BRANCH, FRIDAY 5 JUNE 2009

BY CHAIRMAN GUO SHUQING

Your Excellency the Consul General, Our Distinguished Guests, Ladies and Gentlemen,

It is indeed a great pleasure for me to welcome such an honourable gathering here. Today marks a historic milestone for China Construction Bank.  As the old Chinese saying goes, “Most good results are preceded with challenges”. After our Rep. Office was set up here 12 years ago, it is eventually upgraded to a branch. On behalf of the Bank, I would like to express our sincere thanks to all friends, especially those ladies and gentlemen in the regulating authorities, for what you have done for us.

New York is the world’s largest financial hub, which is also the center of our clients’ business overseas and the city where they travel most frequently outside China.  Given the current financial crisis, the Swine Flu and our tighter budget control, we were asked by many, including our shareholders, why we have it opened now? My answer is, to build a world-class bank, we must have presence here. Because we need market information, advanced expertise and more talented people. And we are very confident of New York and the US economy. The Bank’s shareholders, especially Central Huijin as No. 1 and Bank of America as No. 2, prefer that we earn more profit and cost less. They should be happier now. The operating cost in New York is significantly lower these days. We did enjoy some benefits, such as 10% lower office rents and basic salary, no bonus for recruited employees. I hope it would always be the case, but only if the Wall Street compensation level continued to be limited.  In short, we are absolutely confident that the opening of New York Branch will have wide and profound impacts on the future development of CCB.

The United States is the world’s largest and most competitive economy.  US firms account for nearly 30% of the world’s leading companies, covering almost every sector of the industries.  What is more important, the US people are industrious, pragmatic and creative. The country has so many small but pioneering enterprises and gathers talents from all over the world. It also boasts of the world’s largest number of research universities, the most advanced laboratories, and the best libraries and databases.  It is fair to say that the US still has the strongest capabilities in technological and business innovation.  Although the current US economy is facing some challenges, it has also exhibited remarkable ability to adjust and adopt, and the R&D in many fields has been sped up. We are convinced that the United States will weather the economic downturn and revitalize. 

30 years after normalization of diplomatic relationship, China and US have become the most important trade and finance partners. The US is the primary export destination for Chinese commodities, while China has become the major source of capital for the US. It is very hard to interpret. China is a poor country which ranks after 100 in terms of GDP Per Capita. However, we are the largest savings-surplus country and the biggest capital exporter in recent years. China’s annual $ 400 billion capital outflow mostly go to the US, in particular, New York. As a bank, we should follow the money. That is why we are here. In general, China and the US have become extremely interdependent. The two countries’ closer cooperation is a necessity in leading the world economy out of the financial crisis. Unilateralism and protectionism, in any forms, are not in the fundamental interest of either side.

The strategic partnership between CCB and Bank of America has become a most successful example for business cooperation between two firms with different culture backgrounds.  Both parties have formed successful cooperation in a wide range of areas. I would like to take this opportunity to express my sincere appreciation to our colleagues at Bank of America, especially my good friend Mr. Ken Lewis. And I wish our continued relationship would yield even more substantial results in the future.

Now I think I should say something about our bank. China Construction Bank not only helps build houses, like some people imagine, but also helps people construct a modern life. CCB is the most dynamic and prudent bank in China. It’s also regarded as one of the most advanced comprehensive banks of China, widely recognized as China’s major lender in infrastructure and mortgage businesses.  CCB enjoys the world’s largest number of ATMs.  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. But we are clearly aware that it’s mainly due to the special global economic circumstances. There is another old Chinese saying, “The monkey could become the king, when the tiger is away”. That explains the current situation. CCB still needs to learn a great deal from our international peers.

We pursue an active and steady overseas development strategy to gradually expand our offshore network, broaden service channels and product offerings, and endeavor to provide customers with global and comprehensive financial solutions.

Great opportunities are always accompanied with higher risks. New York is the most sophisticated financial market. But at the same time, many challenges also exist. I trust that CCB New York Branch 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. I also hope CCB New York Branch will receive your continued support and help.

The English spoken by Vice President, Mr. Fan Yifei and me, is not standard BBC English, but rather CCB English. I hope everybody could understand.

Thank you again for coming.