Investment bankers are actually one of the biggest enemies of communists – but in China they work hand in hand, and now apparently also officially at a major international bank. As the Financial Times reported the Communist Party has set up a cell at the Chinese investment subsidiary of British HSBC. This is the first time the party has made such a visible appearance at a foreign investment bank. It is a symbol of the Chinese state’s increasing control of the private sector.
HSBC does not dispute the establishment of a “branch” of the party within its ranks. She explains that party cells are “widespread”. However, the party cell has “no influence on the direction of the company” and “plays no formal role in the day-to-day activities of the company”. The “political affiliation” of their employees does not interest them.
It has long been known that HSBC, like many other banks in China, employs regular party members. A report by telegraph According to 2020, more than 300 employees had a party book at the time – including a vice president of the China subsidiary. And while HSBC denies that the party has any say in its affairs, it is equally clear that no company can exist in the Chinese market that actively opposes the will of the party. In 2020, for example, HSBC publicly supported the introduction of the so-called National Security Law in Hong Kong, on the basis of which democracy activists are persecuted. As a result, the British government moved away from the largest bank in its own country.
In 2018, every second private company had a branch of the party
However, HSBC sees great growth potential in China. The financial sector there was previously strictly regulated, and foreign companies were only allowed to operate in joint ventures with local state-owned companies. Now the rules have been relaxed a bit. HSBC, for example, was allowed to take over 90 percent of the joint investment bank with the state-owned company Qianhai in the spring. However, that does not mean that the state is suddenly on the outside.
The HSBC subsidiary in question has a link to the Chinese company law on its website, according to which all private companies must allow the establishment of a party organization within their own ranks. These should ensure communication between the party and its members, train them ideologically and report misconduct. According to the US think tank Macro Polo, this rule was ignored for a long time. Only under party and state leader Xi Jinping was it really pushed. In 2018, every second private company already had a branch of the party, after only four percent 25 years earlier.
Not only has the number of party organizations increased in recent years, their role has also been strengthened: in 2020, the party’s central committee called on the cells to “guide” private companies, “improve their corporate governance structure and set up a modern corporate system with Chinese characteristics”. The extent to which the branches actually intervene in operational decisions varies from company to company and is usually not transparent. According to reports, foreign companies have so far been spared. That seems to be changing.