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

In a dazzling statement Tuesday, U.S. Secretary of State Mike Pompeo rebuked himself HSBC (HBCYF) to support the legislation, saying “corporate ties” would not deserve the respect of a bank in Beijing. Critics fear the law will undermine the autonomy promised by Hong Kong when the former British colony was returned to China more than 20 years ago.
Pompeo was the last 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 supporting the law. Tom Tugendhat, chairman of the British Parliamentary Committee on Foreign Affairs Committee, is among the British legislators who questioned HSBC’s decision.
Banks are also invested by investors in the bank. David Cumming, chief investment firm for capital at Aviva Investors, which is a shareholder in HSBC, said Wednesday in a statement that we are “uncomfortable” with the decisions of HSBC and other UK-based lenders. Standard Chartered (SCBFF) support the law without knowing how it will work in practice.

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

Even before the publication of Wong’s photo, HSBC faced a difficult situation. Former Hong Kong leader Leung Chun-Ying had earlier singled out silence about the law to the bank, demanding that HSBC express support.

And now that the bank has taken a stand, it seems it is still not a winner over Beijing. Chinese state tabloid Global Times on Tuesday, he accused the bank of holding “a lasting ambiguous stance on Hong Kong’s national security law,” and pointed to a long-standing accusation in China that HSBC helped the United States launch a case against Huawei’s chief financial officer, Meng Wanzhou.
It’s Meng under house arrest in Canada they are awaiting 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. U.S. authorities claim that the Chinese technology company misrepresented itself to HSBC as part of that scheme – Huawei denies the allegation. HSBC told Reuters last year that it had provided information to the authorities. “in line with formal demand“.
HSBC “can now face a worsening dilemma, where it is not yet safe from reprisals”, published by the Global Times, quoting “some observers”.

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

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“This act of loyalty seems to have earned HSBC little respect in Beijing, which continues to use the bank’s business in China as a political influence,” he said in a statement, calling the “Communist Party of China” HSBC a cautious story.

A Chinese Foreign Ministry spokesman said on Wednesday that everyone has “the right to make independent decisions based on merit.”

“For some in the US, perhaps the world lies in only two categories – either they are with the US and should attack China, or China has forced them,” Hua Chunying said in response to a question about Pompeo’s statement. “Those looks are narrow and funny.”

The attacks are a major headache for HSBC, which began life more than 150 years ago as Hong Kong and the Shanghai Banking Corporation with the goal of financing 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 raised enough money to eliminate losses in the UK and leave the company profitable.

HSBC declined to comment. Bank shares 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 becoming collateral damage between the UK and China, said Willy Lam, an assistant professor at the Center for Chinese Research at the Chinese University of Hong Kong.

He noted that Huawei, for example, trying to convince the UK government that can be trusted to help build a 5G network in the country. If British regulators reject Huawei’s progress, China could retaliate by punishing HSBC, Lam said. It has long been rumored that the bank is on the list the “unreliable” side of the company that China could be blacklisted.

“It’s not surprising that the Chinese were supposed to settle on HSBC as … a target,” Lam said.

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

In a way, Lam said, HSBC’s concerns now resemble the political fire that has engulfed Hong Kong’s leading airline Cathay Pacific (CPCAY), Some of her staff participated in widespread anti-government protests in the city last year enraged Beijing. And while the airline took steps to capitulate to the Chinese authorities, two of its top executives eventually resigned.

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

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