If the latest raft of results from the Chartered Financial Analyst exams is anything to go by, European and US financial institutions should keep a close watch on the Chinese service sector. The CFA exams statistics reveal that the numbers of Chinese qualifying as investment analysts is rapidly expanding.
The number of people taking these exams in China rose 15% this year to 1,300 and with a 54% pass rate, China has the highest success rate in the world. India has also seen a huge expansion in the number of CFA entrants and along with China these two fast growing markets now account for 12% of all CFA entrants world wide.
These statistics are further evidence of an emerging trend: the development of a significant Chinese service sector. This was a factor behind China's recent restatement of its 2004 GDP figure by Rmb 2.3 trillion, roughly the size of Taiwan's economy, as it found' a raft of small service sector companies.
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Perceptions of China and India as economies based entirely on low-cost manufacturing are starting to change. I believe that a key theme during 2006 will be a growing recognition of the importance of the emerging Chinese service sector. These services are not the low-end call centres historically associated with India, but increasingly value added ones in rising competition with the developed world, including London.
By Mark Williams, manager of the F&C Pacific Growth Fund
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