'UAE will benefit from keeping the peg'
At this week’s Abu Dhabi Corporate Leadership Conference, guest speaker Lord Patten talked of the rise of China as the world’s leading economy of the 21st century.
Patten said business leaders and politicians should welcome this as he believed it would be a boost for the world economy.
However, Lord Patten said smaller countries like the UAE would not necessarily benefit from de-pegging from the dollar, but would benefit from a common market.
He spoke to Emirates Business about the Gulf and the ascension of powerful economies in the East.
Should the UAE and other gulf states de-peg from the dollar and go for a basket of currencies?
When people talk about de-pegging from the dollar it strikes me as a knee-jerk reaction to current difficulties. Remember, the world’s currency has been underpinned by the dollar for the past 50 years.
Admittedly the euro and yuan are going to be big but it is too early to dismiss the United States and the dollar from proceedings.
China is now the workshop of the world, but there is one superpower and that is the US, and that is coming from a European.
But ultimately, I leave this kind of speculation to the hedge funds as they have done well in the past.
What do you think about a single market in the GCC like that of the European Union?
Creating a single market here in the Gulf, you would have to have a single currency to back it up. I worked with the GCC while in office and saw the benefits of these countries working together.
We were never in a position in Europe, at first, where we had a single rule of law to commercial operations so this is, of course, paramount.
It is not essential to have a single market and single currency but it is essential not to have barriers. Smaller economies will be better off if they consolidate their markets.
The economies concerned on both sides are different but many have reserves of oil and gas so there is a common goal.
There have been huge movements in trade between GCC and Europe and it is worth noting that the euro is going strong.
What are your memories of leaving office in Hong Kong?
I am best known for leaving a job rather than taking one. I am the guy who closed down the British Empire. I left Hong Kong in a royal yacht on my way to Manila and received a 21 gun salute from the Philippine Navy, with live rounds I was told.
Then I arrived at Heathrow at terminal three and waited 30 minutes for a taxi. That is how the British Empire really ended.
What is your opinion of Hong Kong’s growth economically in the past two decades?
I spent five years of my life in Hong Kong. It was an extraordinary experience and when I left the GDP was 22 per cent of China. I think it has done pretty well since then.
Hong Kong has a strong citizenship and rule of law and still has some of the fundamentals of a strong economy. For a city with few natural resources it has done phenomenally well.
The important issue is to be open for investment and skills and have a level playing field and strong rule of law. Hong Kong has been an excellent success story and is one of the most successful economies in Asia.
In Hong Kong you are the only Western man with a Chinese nickname. What does it mean?
I was called Pak Tang but affectionately, I think, they called me Fat Pang. But as I was to find out, referring to one as having a reasonable waistline is not an insult but means you have a healthy bank balance.
Are you optimistic about the future of the world’s economy?
I think so. China and to a lesser extent India will keep rising during this century and become the dominant economies.
The ascent of China is an opportunity rather than a threat and one that is going to oblige us to look at the world differently and act in a different way politically.
Our lack of historical perspective when we look at our own lifetime is apparent here as China was the dominant economic power for 18 centuries before the industrial revolution in 1820.
China will be the largest economy again this century and has turned itself into the workshop of the world.
Exports have risen from $2bn (Dh7.3bn) in the 1990s to $40bn in 2005 and will reach $100bn in 2010. This will help kick-start the world’s economy.
Lord Patten, Former governor of Hong Kong
Lord Patten is most famous for being the 28th and last governor of Hong Kong, which was handed back from British control to the People’s Republic of China in 1997.
Born Christopher Francis Patten in 1944, he became a prominent British politician with the Conservative Party.
During his career, he held posts as Minister for Overseas Development, Secretary of State for the Environment and Chairman of the Conservative Party.
Despite being instrumental in the Conservative’s victory in the 1992 general election, he lost his seat. Later that year, he was appointed Commander in Chief and British Governor of Hong Kong.
After the 1997 handover, Patten became European Commissioner for foreign relations and in 2005 was elevated to the peerage as Lord Patten of Barnes in 2005.
Lord Patten was appointed Chancellor of Newcastle University in 1999, and elected Chancellor of the University of Oxford in 2003.
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