Ties between China and the US were already frayed, but a planned visit by US House Speaker Nancy Pelosi to Taiwan this week threatens to spark a major diplomatic incident that could hasten Beijing’s decision to reaffirm their claims of sovereignty over the island.
As Xi Jinping warned Joe Biden that the United States was “playing with fire” by allowing Pelosi’s trip to East Asia to go ahead, the world’s only two superpowers may be on a collision course.
While all-out military conflict seems unlikely, China began preparing for the possibility of sweeping Western sanctions shortly after Russia invaded Ukraine.
Chinese officials have long viewed a strategic conflict with the West as a matter of time. If not for Taiwan, then a new crackdown on Hong Kong or Beijing’s material support of Russia in Ukraine, in the form of weapons or financial aid, could also compel the West to act.
Indeed, China is so worried about the possibility of recriminations that it ordered a stress test of its economy just weeks after Vladimir Putin’s tanks rumbled over the border with Ukraine, as officials scrambled to understand how how resistant is China to stay out of Western finance. system
This is not only deeply inconvenient for HSBC, but also commercially dangerous because the bank would find itself at the center of hostilities by virtue of its significant presence in China.
At an emergency meeting in April of Chinese regulators and domestic and foreign banks operating in China, including HSBC, executives were asked what steps could be taken to protect the country’s overseas assets, particularly $3.2 trillion in foreign reserves.
However, US sanctions would almost certainly prevent the bank from doing business there, so it is hard to see HSBC continuing to exist in its current form. In the end, geopolitics always trumps bureaucratic concerns. Brexit was proof of that.