The economic powerhouse Hong Kong Shanghai Bank — HSBC to the world — has decided to stay in London instead of moving back to Hong Kong.
Seems the recent crackdown on human rights, including freedom of press, in China plus the growing influence of China over Hong Kong affairs has spooked the bank to not only decide to stay in London but to abandon its practice of reviewing every three years where to place its headquarters.
Following the crackdown on the Tiananmen Square demonstrators in 1989, HSBC moved out of Hong Kong to London. At that time it started a process whereby it would review every three years where its headquarters would be located.
According to Quartz and other media reports, the move was clearly motivated by the political situation in Hong Kong and China. One study estimated HSBC could save US$14 billion by moving to Hong Kong. And yet it didn’t.
One always looks for links. The HSBC action does not need any hard digging to see that the path Hong Kong leaders are taking is not good for the economy of the territory.
Besides the economic impact the HSBC action has on the Hong Kong economy, it could also have an impact on the US. The bank has branches across the USA. The move by the HSBC board may not have a direct impact on how banking is done in the US, but it could influence the value of HSBC USA stock, and therefore all the Americans who are investors.
(Okay, so it is a weak link back to the US. But it is an important economic and psychological link for Hong Kong.)
When China took control of Hong Kong in 1997, by treaty it guaranteed the protection of Hong Kong’s civil rights including freedom of speech and press. Since the take over, economic pressure has been applied to the newspapers to go soft on China. Reporters and editors at RTHK, the Hong Kong-owned broadcast outlets, have repeatedly come under pressure to be a mouthpiece for the Hong Kong government and to avoid stories critical of China.
Recently five Hong Kong publishers of books critical of China have gone missing. One showed up in China, supposedly helping police with a case.
The general consensus is that all five were kidnapped by Chinese security forces. Such direct interference in Hong Kong’s legal system by Beijing is a direct violation of the treaty that allowed for the hand over in 1997. The move prompted the British government to make a public declaration denouncing the Chinese government’s action. For its part, Beijing said the UK was interfering in China’s internal affairs. (This is the basic response to any criticism of the Chinese government.)
So clearly Beijing thinks cracking down on dissidents, where ever they may be, is more important than providing for a stable and profitable economic Hong Kong.