HSBC and Standard Chartered banks have backed the new security legislation in Hong Kong imposed by Beijing. The contentious law has triggered protests in the semi-autonomous city and has received a global backlash from several nations including the US.
HSBC’s Asia Pacific chief executive Peter Wong signed a petition backing the law which has been widely criticised. HSBC “respects and supports all laws that stabilise Hong Kong’s social order,” it said in a post on social media in China.
Standard Chartered said that the law can “help maintain the long term economic and social stability of Hong Kong”. Both the banks are headquartered in Britain but have a significant market in Asia.
The support of these banks has drawn major criticism. Jacob Rees-Mogg, a British politician and the leader of the House of Commons, said London-based HSBC may be more closely “aligned with the Chinese government than Her Majesty’s government.”
Meanwhile, Andrew Adonis, a Labor member of the House of Lords and former Transport Secretary said that “HSBC should stand up for human rights in the city. However, the idea that financial institutions ought to operate as political activists when they are interest-driven organizations, is inherently unrealistic”.
What is the new security law?
The legislation is set to outlaw the acts of secession, subversion and terrorism and provides for a jail term of 3 years. The new law has seen a global condemnation. Legislators and politicians from as many as 23 countries have issued a joint statement criticising the new Security law imposed on Hong Kong.
Basic Law is Hong Kong’s mini-constitution which protects its rights like the freedom of speech and the freedom of assembly which don’t exist in mainland China. It also sets out a structure of governance in the city. The new law is seen as a threat to such freedoms protected by the mini-constitution.
“Does HSBC feel compelled to weigh in on other laws in other countries? We have watched over the past week China clearly assert pressure on businesses and other actors to show their support for the law to create the illusion of support,” said Sophie Richardson, China director for U.S.-based Human Rights Watch.
Reasons for support by the Banks
According to Tom Fowdy, a British political and international relations analyst and a graduate of Durham and Oxford University, the belief that major financial institutions would be predisposed to opposing Hong Kong’s national security law was ideological and based on an obvious misunderstanding as to how banks operate.
He explained that HSBC has lent its support for the new security law for various reasons. “The West seems to think that the pre-law status quo in the city is more attractive for financial institutions and that the law itself is the problem.
But evidence contradicts this: the escalating violence and constant disruption posed by protests as well as the continuing destruction of local infrastructure was actually a massive liability for businesses and pushing huge capital flights out of the city,” he added.
He further emphasised that HSBC and Standard Chartered support the law because the law is intended to solve the problem of instability in the city which it is facing right now. “Banks operate on a premise of stability, not activism. They are going to support legislation which ensures the restoring of public order,” he wrote. He went on to say that Trump’s threat to withdraw trading privileges from Hong Kong was not strong enough to “shake the markets”.
“Whilst the U.S. may withdraw trading privileges, this does not change the reality that Hong Kong’s setup remains of high quality and appeal for financial institutions,” he observed.
He argued that Beijing isn’t trying to break the “one country, two systems” as perceived by the west. “Beijing recognizes Hong Kong had a national security problem in the fields of sovereignty which needed to be addressed; however, this has no direct or indirect implications for the city’s own economic model which is of benefit for the whole country,” he added.
He concluded saying that HSBC and Standard Chartered have made an assessment that the national security laws proposed for Hong Kong run in accordance with their respective interests as financial institutions.
“The idea by some politicians that banks should be political activists and support unrest and chaos in the environment they exist in shows a minimal understanding of how these businesses operate,” he wrote.