Beijing squeezes, and HSBC knows where it makes most of its money. Standard Chartered, another UK bank, did the same.
Global banking behemoth HSBC threw its full weight behind China’s imposition of security legislation on Hong Kong, arguing that the new law will help bring much-needed political stability and economic growth and development to the city. The bank’s kowtowing to Beijing is the inevitable culmination of the UK-based lender’s multiyear Asian re-pivot, but it also risks attracting U.S. ire. And if recent history is any indication, that tends not to end happily for global lenders.
In a post on one of HSBC’s social media accounts in China, the bank’s Asia-Pacific head Peter Wong signed a petition backing the law. “HSBC respects and supports any laws that stabilize the social order in Hong Kong and revitalize economic prosperity and development in Hong Kong,” Wong said in the post.
Mr. Wong’s comments were quickly seconded by the institution he represents. Asked to comment on the social media post, an HSBC spokeswoman in London said: “We respect and support laws and regulations that will enable Hong Kong to recover and rebuild the economy and, at the same time, maintain the principle of ‘one country two systems.’”
The governments of the U.S., the UK and their five-eye partners, Australia, Canada, and New Zealand, would beg to differ. They assert that China’s new security law obliterates the one country, two systems principle, “dramatically eroding,” in the words of UK Premier Boris Johnson, the partial autonomy Hong Kong was granted when London handed back control of the city to Beijing in 1997. Yesterday, Johnson offered refuge to up to 3 million Hong Kong citizens, which is unlikely to have gone down well in Beijing.
Relations between the UK and China have not been this strained for decades. Until recently, the UK government had viewed China as a key strategic partner in its post-Brexit future. At Davos in 2016, the then Chancellor of the Exchequer George Osborne said the UK wanted to be China’s best partner in the West. As part of this charm offensive, Downing Street awarded the tender to design and build a number of nuclear power stations to a consortium led by China’s state-owned General Nuclear Power Group and France’s EDF. Chinese participation in one of those projects, Sizewell C, is now being reconsidered.
But the British banks and companies that depend on Hong Kong and mainland China for most of their revenues and profits do not have that luxury. They are stuck where they are and they know what side their bread is buttered on. Just in case they forgot, former Hong Kong chief executive Leung Chun-ying was on hand last week to remind them. In a Facebook post the pro-Beijing former apparatchik urged everyone with HSBC bank accounts, particularly HK officials and HK delegates to the legislative and consultative bodies in the mainland, to stop using them, until the bank made its position clear on China’s security law, which it did five days later.
Continue reading the article on Wolf Street