By Lananh Nguyen, Saeed Azhar and Scott Murdoch
WASHINGTON/HONG KONG (Reuters) – High U.S. bankers on Wednesday got here beneath strain from lawmakers to take a more durable stance on commerce relations with China amid rising tensions between Washington and Beijing over Taiwan’s sovereignty and China’s human rights report.
In a listening to earlier than the U.S. Home of Representatives Monetary Providers Committee, Republican Congressman Blaine Luetkemeyer pressed financial institution CEOs on how they might react within the hypothetical case of a Chinese language invasion of Taiwan .
Lawmakers additionally requested CEOs to sentence “human rights abuses” in China, in contrast to earlier hearings which tended to concentrate on nationwide points comparable to housing and client protections.
“We’ll comply with the rules of the federal government, which has been working with China for many years,” mentioned Financial institution of America chief govt Brian Moynihan. “If they modify that place, we are going to change it instantly, like we did in Russia.”
JPMorgan Chase CEO Jamie Dimon and Citigroup CEO Jane Fraser each agreed, saying their banks would comply with authorities tips if China have been to invade Taiwan.
The heightened scrutiny underscores the challenges the nation’s largest lenders more and more face as they attempt to stability business pursuits with strain from policymakers, activists and traders to take a stand on environmental points, social and governance.
Wall Road giants together with JPMorgan, Goldman Sachs and Morgan Stanley have in recent times sought to develop their operations in China, the world’s second-largest financial system.
Authorities have granted U.S. banks larger possession of their securities enterprise regardless of rising geopolitical tensions. Regardless of a bigger footprint, China just isn’t but an enormous revenue heart for these banks.
“There can be few significant positive factors for america or losses for China if banks cut back their operations there,” mentioned Hong Kong-based International Supply Companions analyst Andrew Collier.
“The symbolism, nevertheless, is extra essential, as China could be very involved about decoupling commerce and imports of key merchandise like semiconductors, so any strain on the monetary sector would ship worrying alerts to Beijing.”
Responding to a query about remarks by CEOs and lawmakers of US banks, Chinese language Overseas Ministry spokesman Zhao Lijian mentioned on Thursday that “the Taiwan concern has all the time been a very powerful and most delicate” for US-China relations.
“The U.S. facet ought to strictly adhere to the one-China precept and the provisions of the three U.S.-China joint communiques, severely and successfully implement the U.S. management’s place to not help Taiwan independence, cease manipulating in Taiwan”.
JPMorgan, current in China since 1921, serves Chinese language and worldwide corporations, monetary establishments and authorities companies. Final yr, it turned the primary overseas firm to completely personal a securities enterprise in China.
Citigroup, which was the primary U.S. financial institution to arrange store in China in 1902, final yr utilized for a securities license in mainland China as a part of its effort to develop its enterprise available in the market.
China has performed army workout routines close to Taiwan in latest weeks. After US Home of Representatives Speaker Nancy Pelosi’s go to to Taipei, China fired missiles into waters close to the island, though its exercise has since declined.
China claims to democratically govern Taiwan as its personal territory. The Taiwan authorities rejects China’s sovereignty claims.
Congressman Luetkemeyer requested Fraser what Citigroup would do if a conflict in Taiwan broke out.
“That is a hypothetical query,” Fraser mentioned. “It is extremely possible that we’ll have a diminished presence.” Citigroup has a worldwide attain that spans greater than 160 nations.
When later requested by Republican Lance Gooden if she would condemn “the persevering with human rights abuses in China”, Fraser hesitated. “Doom is a powerful phrase,” she mentioned. “We’re actually very distressed to see him.”
JPMorgan’s Dimon additionally warned that america should compete with Chinese language banks, which have grown in measurement in recent times to change into the most important on the planet.
“I’ll do the whole lot in my energy to be sure that we compete with one of the best Chinese language banks on the planet. It is extremely essential for the way forward for America that America maintains its monetary supremacy as n anything.”
(Reporting by Lananh Nguyen and Pete Schroeder; Extra reporting by Saeed Azhar, Scott Murdoch in Hong Kong and Eduardo Baptista in Beijing; Modifying by Richard Pullin and Toby Chopra)