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America’s Biggest Financial Firms Are Still Collaborating with the Sanctioned Hong Kong Government
Hong Kong plans to use Western bankers' visit next week to promote the repressive city's "resiliency and vibrancy" as a funnel for foreign money into China. The bankers have been happy to oblige.
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In 1936, the world watched with growing alarm as the Nazis, having consolidated power, expanded Germany’s military rearmament and mass persecutions of Jews. Yet where others saw danger, Wall Street saw opportunity. For years, the Nazi regime had been seizing assets from Jewish Germans, which they wanted to use to raise funds for their war machine. U.S. National Archives records released in 2004 show that a group of American banking tycoons, led by Chase National Bank and its president Winthrop Aldrich, stepped in to help the regime sell these stolen German reichsmarks below face value to American Nazi sympathizers in exchange for more marketable U.S. dollars. When, during 1938’s Kristallnacht, tens of thousands of Jews were sent to concentration camps and their property seized, Chase jumped at the chance to “increase the scope of their business” in the seized assets. All told, the Wall Street banks facilitated the raising of $20 million, or nearly $400 million in 2022 dollars, for the Nazi war machine.
While modern comparisons to the Nazis should always be approached with caution and qualifications, China under the Communist Party is looking awfully similar to Germany in the 1930’s. Having rapidly developed one of the most powerful militaries in the world, China has laid claim on portions of at least 17 countries ranging from Taiwan to the entire South China Sea. It has operated concentration camps for an estimated 1 million Uyghurs and other minorities in Xinjiang and instituted a widespread system of forced labor and sterilizations. Using Covid as an excuse, it has imposed unprecedented control over movement along with tightening its grip on speech and privacy. And a cult-like figure—Xi Jinping—has consolidated near-total power over the government and Communist Party, while stoking extreme nationalism and exceptionalism among the majority Han Chinese ethnic group.
Yet just as in 1936, as the world watches with growing alarm, Wall Street sees opportunity. And once again, Chase—through its successor bank J.P. Morgan Chase, now led by Jamie Dimon—is a key collaborator. Next Tuesday, senior executives from JPMorgan Chase, Citibank, Goldman Sachs, Morgan Stanley, Blackrock, KKR and other American and global financial firms will descend on Hong Kong to help the city’s CCP-dominated government solidify its control of the previously-autonomous city as it seeks to restore Hong Kong’s function as a funnel for foreign money into China and the CCP’s coffers.
American bankers will visit Hong Kong in service to the CCP’s propaganda machine
After losing at least 140,000 workers in the past two years who fled to safe havens like Britain and Canada, Hong Kong’s Chief Executive John Lee, a career policeman who is sanctioned by the U.S. for his leading role in Hong Kong’s violent suppression of dissent, recently announced an initiative to attract foreign workers and smooth over the city’s image. These days, Lee has tamped down his references to critical journalists as “criminals” who will “pay a hefty price,” and to opposition lawmakers as “participating in subversion” for trying to win elections—despite that dozens of members of both groups are among the hundreds who have been imprisoned and awaiting show trials under 2020’s National Security Law. Rather, he talks about his plans to “trawl the world for talents” and attract “100 high-potential or representative enterprises” to the city. In other words, the Chief Executive is now the Chief Illusionist, tasked with wrapping up the repression and violence of the past three years into a shiny new Christmas package.
It is not surprising to see the authoritarians who run Hong Kong pretending that everything is fine and normal. Far more shocking, however, is that some of the United States’ biggest financial firms have stepped forward to help them. When the government announced last month that senior executives from American firms and others from across the globe would attend its summit in the city on November 1-3, where they will meet, strategize, and socialize with John Lee and other officials in his government, it made no secret of its purposes. In its press release, the Hong Kong government praised these bankers as “staunch supporters of Hong Kong,” and emphasized that their presence will be used to “underline Hong Kong’s status as an international financial center,” and prove the “resilience and vibrancy that define Hong Kong.”
These bankers have surely seen these comments and know what this summit is actually about. Yet, these power players apparently believe that Chinese profits are too good to pass up, so they will fly in to show their fealty, take a few pictures with dictators and criminals, then head back to the comfort of their Western liberal democracies.
And let’s be clear: if these busy senior executives are taking three days out of their schedule for this summit, they expect to get something in return—new, profitable investments in the Chinese regime. Despite the world’s growing alarm over the last few years, foreign investors are still pursuing investment opportunities that fund the CCP’s activities. These banks don’t want to miss out on their piece of the pie.
American banks are undermining Washington’s policy on Hong Kong and must be reined in
On September 21, a week before the summit announcement, the largest American banks testified to the House Financial Services Committee, where several including Citigroup CEO Jane Fraser and JP Morgan CEO Jamie Dimon assured members of Congress that they “follow government guidance” on their operations in China. Yet Congress and two successive presidents have repeatedly declared the Hong Kong government to be acting contrary to U.S. interests.
To make matters worse, at the same time this summit is taking place, the Hong Kong government is shielding the assets of sanctioned Russian officials. Two weeks ago, a superyacht owned by sanctioned Russian oligarch Alexei Mordashov appeared in Hong Kong’s waters. The U.S. State Department condemned the incident and characterized Hong Kong as a possible “safe haven by individuals evading sanctions” that “further calls into question the transparency of the Hong Kong business environment.” In response, John Lee said, “We will just laugh off the so-called sanctions.”
To those of us who monitor the Hong Kong and Chinese governments and their unpredictable, repressive policies, it is perplexing that any company would consider further investment into China—an unpredictable regime run by a single unpredictable man surrounded by yes-men—to be a good bet. Nonetheless, these financial firms appear to be ready to take that plunge. While I don’t expect the U.S. government to particularly care if megabanks make a profit for their wealthy clients, when doing so undermines U.S. sanctions and international credibility, the government must take steps to rein them in.
After an increasing number of critics began to pile on, including the co-chairs of the Congressional Executive Commission on China Representative Jim McGovern and Senator Jeff Merkeley, a coalition of 20 U.S.-based Hong Kong activist groups, and the Wall Street Journal editorial board, Citibank’s Jane Fraser claimed that she had tested positive for Covid-19 and will pull out of the summit. The rest of these executives have only a couple of days to come down with similar illnesses or unexpected family commitments, but I’m not holding my breath.