China has emerged as the world’s manufacturing workshop. India has become a technology outsourcing hub. Will the West’s strong dominance of the financial services business be the next domino to tumble?
Economist Kenneth Rogoff has already set the cat among the pigeons this week, by saying that a few big global banks will fail and the financial system in the US will shrink. Many believe that Lehman Brothers is very close to serious trouble; it is reportedly holding secret talks with Chinese and South Korean investors for fresh capital. Other banks such as Citigroup have been helped by West Asian funds.
Amid this comes the news that the Industrial and Commercial Bank of China is now the world’s most profitable bank with a net profit of $9.42 billion (about Rs41,000 crore) in the first half of this year.
Straws in the wind? Maybe not. These could be the first signs of another power shift. No wonder i-bankers are happy to move to Asia.