HSBC is taking on heat from all sides after supporting China in Hong Kong

HSBC is taking on heat from all sides after supporting China in Hong Kong

In a gush statement Tuesday, US Secretary of State Mike Pompeo issued a criminal statement HSBC (HBCYF) to support the law, saying “corporate crowds” will not earn the bank’s respect in Beijing. Critics fear the law erodes the autonomy that Hong Kong was promised when the former British colony was returned to China more than 20 years ago.
Pompeo is the latest politician to deal with HSBC after the company posted a photo on Chinese social media last week showing Asia Pacific CEO Peter Wong signing a petition in support of the law. Tom Tugendhat, chairman of the British Parliamentary Committee on Foreign Affairs, is among the British legislators who questioned HSBC’s decision,,
The bank’s investors are also beginning to weigh. David Cumming, chief investment officer of shares in Aviva Investors, a shareholder in HSBC, said in a statement Wednesday that “we are not worried” about the decisions of HSBC and its UK-based counterpart creditor Standard (SCBFF) to support the law without knowing how it will work in practice.

“If companies make political statements, they must accept the corporate responsibilities that follow,” Cumming said.

Even before Wong’s photo was published, HSBC faced a difficult situation. Former Hong Kong leader Leung Chun-ying had previously named the bank for his silence on the law, urging HSBC to express its support.

And now that the bank has taken a position, it still doesn’t seem to be winning over Beijing. The Chinese state tabloid Global Times on Tuesday, the bank was accused of having a “lasting ambiguity on Hong Kong’s national security law” and cited a long-standing accusation in China that HSBC had helped the United States file a lawsuit against Huawei’s chief financial officer, Meng Wanzhou.
It’s me under house arrest in Canada pending a decision on whether she will be extradited to the United States to face charges of bank fraud and evasion of economic sanctions against Iran. US authorities claim that the Chinese technology company misrepresented itself to HSBC as part of this scheme – a claim Huawei denies. HSBC told Reuters last year that it was providing information to the authorities. “in accordance with the official demand. “
HSBC “may face a worsening dilemma when it is far from safe from repression”, reported the Global Times, quoting “some observers”.

Even Pompeo noted that HSBC is still facing a frosty reception in China.

“This display of allegiance seems to have earned a little respect from HSBC in Beijing, which continues to use the bank’s business in China as a political lever,” he said in a statement, calling HSBC’s “Communist Party of China” a cautious tale. “

A Chinese foreign ministry spokesman said Wednesday that everyone has “the right to make independent, merit-based decisions.”

“For some in the United States, the world may be in only two categories – either they are with the United States and have to attack China, or they have been forced by China,” Hua Chuning said in response to a question about Pompeo’s statement. “These views are narrow-minded and funny.”

The attacks are a major headache for HSBC, which began its life more than 150 years ago as a banking corporation in Hong Kong and Shanghai to finance trade between Asia and Europe. The bank still has a large business presence in the region: Last year, its subsidiaries in Hong Kong and China withdrew enough money to erase losses in the UK and maintain the company’s profits.

HSBC declined to comment. Shares of the bank, registered in Hong Kong, closed 1.5% on Wednesday.

A pedestrian passing by HSBC in Hong Kong in 2017.

As a British business, the bank faces the risk of collateral damage between the United Kingdom and China, said Willie Lam, an assistant professor at the Center for Chinese Studies at the Chinese University of Hong Kong.

He noted that Huawei, for example, trying to persuade the UK government that can be believed to help build the country’s 5G network. If Huawei’s progress is rejected by British regulators, China could retaliate by punishing HSBC, Lam said. The bank has also long been rumored to be on the list “unreliable” foreign companies that China may be blacklisted.

“It’s not surprising that the Chinese had to establish themselves on HSBC as … a target,” Lam said.

Meanwhile, Washington is “trying to build a coalition” of allies against Beijing, according to Lam. He said Pompeo’s decision to call HSBC specifically reflected “escalating” tensions between the United States and China.

In a way, Lam said, HSBC’s difficulties now resemble the political storm that engulfed Hong Kong’s leading airline. Cathay Pacific (CPCAY)Some of its employees participates in widespread anti-government protests in the city last year, angered Beijing. And while the airline took steps to surrender to the Chinese authorities, two of the top executives eventually resigned.

– Eoin McSweeney, Isaac Yee and Jennifer Hansler contributed to this report.

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