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Here's why China is backing globalization, according to Allianz's CEO
China is backing globalization for one very simple reason, according to Allianz CEO Oliver Bäte: The country absolutely needs it.
The financial services giant's CEO spoke with CNBC Saturday on the sidelines of the China Development Forum in Beijing, and he addressed the apparent rise of China as free trade's global champion — at least rhetorically.
"The interesting thing is it's not because people are nice. People are rational and intelligent: They need," Bäte said. "As China is moving to an economy that more and more depends on global trade in an active role — not just as an exporter of pieces, but of goods and services — and as they go into other countries, it gets a lot more dangerous because the country doesn't have the experience and how to operate in different cultures and other environments."
"As they move forward they need partners because, when the dragon shows up in a small country or vis a vis a small company they want to invest in, people get scared," he said. "And I think they will look to partners to help them on that journey, while we, in other parts of the world are trying to blame globalization for problems that have nothing to do with globalization. They're just due to bad management."
As for China's economic management, Bäte struck a strongly bullish note on the business prospects within Asia's largest economy.
"This market is really, really exciting because not just is the economy growing still 6.5 percent - 7 percent, the insurance industry is just starting," he said. "Despite the fact that it has been growing very very strongly and even in some provinces you had 200 billion in premia, it's going to grow double digits and it's going to grow faster as people amass enough wealth to start now to protect it."
Chinese growth has moderated in recent years, but Bäte was sanguine about the trend.
"The issue is that we have some special effects in the last few years: People were very nervous about the stock market crash at the beginning of last year, so you had some special effects," he said. "We are looking more for longer-term developments and it's likely to grow double digits for the foreseeable future. We might not have sort of the 16 (percent) growth — might be more moderate."
"But the key issue is: Here, markets are growing double digits, while in the rest of the world they're growing single digit."
Still, foreign insurers have not had much of a chance to participate in that growth, Bäte acknowledged, saying that non-Chinese companies log only about 5 percent in nominal market participation including joint ventures.
The solution, he said, is in part to find the right partnerships to help take businesses to the next level in China. "We are here for the long run," he said. "Allianz has been around for a hundred and twenty seven years so we are waiting for when the time is right, we feel the opportunity is just beginning for us."
Bäte also spoke with CNBC about other areas of focus for Allianz's business, including PIMCO, which he said has seen a "stellar" turnaround. But investors, he said, are not yet "fully recognizing" his company's firm footing because they "are nervous" about political developments.
"The Netherlands has been positive, France is positive, people will get the stamina back and then even invest more strongly in our share, which is up 35 percent since May of 2015," he said. "So, maybe it's the last opportunity to get a good deal."
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