In Hong Kong, what you don’t say can often get you into trouble more than what you do.
That’s something UK-based bank HSBC is finding out the hard way, when two weeks ago, Hong Kong’s former leader Leung Chun-ying—who is also a member of China’s top advisory body—took to Facebook and singled out the bank for not publicly supporting a sweeping national security law that Beijing is imposing on Hong Kong. The veiled threat achieved its intended result: a few days later, HSBC threw its weight behind the law.
That belated show of political support seemingly did little to placate pro-China voices. One Chinese academic quoted in nationalistic tabloid Global Times said HSBC’s “late” declaration of support would only be forgiven if it can “show its sincerity… with concrete actions in the future.” A prominent legal scholar penned a piece (link in Chinese) painting HSBC as an imperial British bank: one that reaped profits off of war reparations that China paid the British empire, and one that continues to threaten China’s national security as a close collaborator of Western democracies. This week, Hong Kong’s Communist Party mouthpiece, Ta Kung Pao, ran a front-page story accusing HSBC of “betraying” Chinese tech giant Huawei.
That the history of imperialism is invoked to denounce an international bank’s perceived political reticence does not augur well for HSBC, said Ho-fung Hung, a professor of political economy at Johns Hopkins University. “Beijing can accuse [all old companies] of doing something hurting China a hundred years ago. When this history is brought up, it seems this anger is very hard to stifle.”
HSBC has had a good run in Hong Kong, where it makes much of its profits. But the bank, like the city itself, might be said to have thrived in a borrowed place on borrowed time. Hong Kong was always placeless, international, in flux, a portal to the world. When the territory was handed back to China in 1997, a promise was made that its capitalist way of life, with an independent judiciary guaranteeing broad civil liberties, would continue for 50 years—yet more borrowed time. It was in these conditions that HSBC prospered.
It appears the borrowed time has now run out. The unilateral imposition of the national security law on Hong Kong shatters all remaining semblance of “one country, two systems,” and HSBC has been swept up in the upheaval as Beijing demands that major companies pledge allegiance to the new normal. The combination of HSBC’s colonial past, and its recent role in providing information to US officials building a case against Chinese tech giant Huawei, now makes the bank the perfect multinational victim in China’s aggressive push to make businesses bend to its will.
“[A]nyone targeting [the] Chinese market would be expected to be 100% politically correct from Beijing’s standard,” said Simon Shen, an associate professor of international relations at the Chinese University of Hong Kong.
China has long invoked its “century of humiliation”—spanning from its defeat in the First Opium War in the mid-1800s to modern China’s establishment in 1949—as part of its founding mythology, and the memory of it provides a useful foil to Beijing’s narrative now of a great national “rejuvenation.” China has risen, and any past humiliations must be accounted for. HSBC’s heritage and dominant presence in Hong Kong, which was ceded to the UK in 1841, is a reminder of that humiliation. The detention of Huawei executive Meng Wanzhou in Vancouver pending her extradition to the US on fraud charges is another such humiliation. That HSBC is involved, however tangentially, in both these instances makes it a ripe target for China.
HSBC has another disadvantage: its international stature. It has long styled itself as “the world’s local bank,” establishing footholds across continents over the decades. Its roots in Hong Kong and Shanghai meant it was well-positioned to ride China’s economic rise, but it’s also deeply connected to the US and European markets. Now those global ties are suddenly a liability.
“HSBC is caught in a very difficult position. It has a lot of business related to China… but at the same time, it has a lot of business in the US and definitely historically it has relied on the UK for its market and relations for its activities,” said Hung. “When US-China relations are getting worse, then HSBC gets caught in the middle.”
Other organizations, including the city’s largest property developers and five major universities, have issued statements along similar lines in recent days. Standard Chartered, another UK-headquartered bank that is heavily reliant on Asia for its business, also publicly backed the law, as did the Hong Kong-headquartered conglomerate Jardine Matheson, whose roots stretch back to the Opium Wars.
A former senior Hong Kong-based HSBC executive blamed the bank for its current predicament, specifically its decision to relocate its headquarters from Hong Kong to London in 1993 which precipitated a distancing of relations with China.
“The HSBC of today, compared to 10 or 20 years ago, is very different. Before, Hong Kong had a lot of autonomy” over the banks’ operations, the executive said. Ties with China were also closer when the bank was headquartered in Hong Kong, he said, and it was easier to speak with Chinese officials because HSBC was seen as a Hong Kong bank. “You could just walk over, have tea, and chat. It’s like living upstairs and downstairs. Now the distance is greater”—something he finds “regrettable.”
HSBC has faced repeated questions in recent years over whether it plans to move its headquarters back to Hong Kong, given the importance of the region to its business. It has cited the UK’s “internationally respected regulatory framework and legal system, and immense experience in handling complex international affairs” in the past to justify its decision to remain in the UK.
Indeed, HSBC’s public support of Beijing hasn’t gone down well back “home.” British politicians, including Conservative lawmaker and prominent China critic Tom Tugendhat, have voiced concerns over the bank’s support for Beijing, and a top-20 shareholder rebuked HSBC for its move. HSBC could face more reprisals from China in coming days, especially if the UK sides with the US in banning Huawei equipment from the country’s 5G networks. US secretary of state Mike Pompeo has also admonished the bank for its support of China.
In a statement, HSBC said that it respects and supports laws “that will enable HK to recover and rebuild the economy and, at the same time, maintain the principle of ‘one country two systems’.”
In an extensive speech this week, Zhang Xiaoming, deputy director of China’s office overseeing Hong Kong affairs, said the city’s capital markets don’t belong to the city, but to China and the world. The more prosperous and stable Hong Kong is, he said, the more it will contribute to China’s rejuvenation. HSBC will need to figure out how it fits into that plan for rejuvenation.