CHINA WATCHChinese Subsidiary of British Investment Bank Now Includes Communist Party Committee
British bank and financial services giant HSBC, a longtime presence in East Asia, has become the first foreign lender to install a Chinese Communist Party committee in its investment banking subsidiary in China.
British bank and financial services giant HSBC, a longtime presence in East Asia, has become the first foreign lender to install a Chinese Communist Party committee in its investment banking subsidiary in China.
HSBC’s China investment bank, HSBC Qianhai Securities, established a CCP committee after the lender increased its stake in the joint venture from 51% to 90% in April.
Some experts are concerned that the move might expose HSBC to increased influence from Beijing. But other analysts told VOA Mandarin that the development isn’t a big deal, saying there is little evidence that these party committees exert substantial influence in privately owned companies.
“The establishment of a party committee at HSBC may be super important, or it may be entirely irrelevant and not worth the attention it’s getting,” Scott Kennedy, a senior adviser at the Center for Strategic and International Studies in Washington, told VOA Mandarin in an interview.
“The vast majority, as far as I can tell, really don’t do anything. They haven’t affected the normal procedures for corporate governance,” he said. “But in Xi Jinping’s China, nothing is impossible.”
Founded During a Growth Phase
Founded as the Hongkong and Shanghai Banking Corporation, Ltd., HSBC was established in Hong Kong in March 1865, and opened its doors in Shanghai one month later. It launched at a time of burgeoning trade among China, India and Europe.
China’s legal requirement that all companies with more than three party members must establish a party committee dates back to the 1993 PRC Company Law, according to Gabriel Wildau, a managing director at the consulting company Teneo. But before Xi became the CCP’s general secretary in 2012, this requirement was lightly enforced, especially for private and foreign companies.
“Under Xi Jinping, enforcement has intensified, and the share of private companies with party cells has increased,” Wildau wrote in an email to VOA Mandarin, referring to China’s president since 2013. Xi has expanded the party’s influence over the economy in many ways, apparently based on his sense that both state-owned and private companies were often operating business models that undermined the party’s political, economic and social objectives, Wildau said.
Seven international banks control investment banking operations in mainland China, including HSBC, Goldman Sachs, JPMorgan, Credit Suisse, Morgan Stanley, UBS and Deutsche Bank, according to the Financial Times. So far, only HSBC has set up a CCP committee, according to the report.
