Global Financial Leaders' Investment Summit in Hong Kong this week will test which side these executives are on.
By Robby Stephany Saunders
October 21, 2022
Hong Kong police arrest a pro-democracy protester in July 2020. AFP VIA GETTY IMAGES
China has been in the news plenty this year. First there was the controversy surrounding Beijing’s hosting of the Winter Olympics. And then the United Nations issued a report confirming China’s “crimes against humanity.” Clearly, China is an egregious violator of human rights. But despite such global notoriety, America’s financial industry has remained curiously indifferent.
In fact, America’s major investment firms continue to maintain a cozy relationship with Beijing. And nowhere is this more apparent than the upcoming Global Financial Leaders’ Investment Summit in Hong Kong.
Hong Kong is a curious choice for any free-market summit. Once considered a sovereign region, Hong Kong has increasingly come under Beijing’s control. And since 2019, the territory has progressively cracked down on dissent—with protesters facing extradition to mainland China.
It’s evident that Hong Kong is now under Beijing’s thumb. But apparently that doesn’t trouble the Wall Street executives from Goldman Sachs GS, +1.18%, Citigroup C, +0.78%, Morgan Stanley MS, +1.89%, and BlackRock BLK, +0.94% who are already lining up to attend the Hong Kong summit. This is doubly disturbing when one considers that Hong Kong’s new chief executive, John Lee, was handpicked by Beijing to help cement China’s crackdown on protesters.
Wall Street revealed its tilt toward China in a recent congressional hearing, when some of the nation’s top banking executives testified before both houses of Congress. When questioned about a potential Chinese invasion of Taiwan, the CEOs agreed that they would do whatever the U.S. government required in such a crisis. But this was just posturing.
More telling was a comment by Citigroup’s Jane Fraser. When asked if she would condemn China’s ongoing human-rights abuses, Fraser said, “Condemn is a strong word. We certainly are very distressed to see it.”
Wall Street is simply far more focused on reaping massive profits from its investments in China. It’s estimated, for example, that JPMorgan Chase JPM, +1.80% holds roughly $20 billion worth of investments in China. Such massive holdings evidently outweigh concerns over China’s appalling human-rights record.
That’s worrying because, in addition to genocide, Beijing has overseen the mass transfer of Uyghurs and other ethnic groups in the Far West region of Xinjiang to factories throughout China. And more than 80,000 Uyghurs were transferred out of Xinjiang between 2017 and 2019 alone. Under forced-labor conditions, many of them are now working in factories tied to at least 82 well-known global brands, including Apple AAPL, -1.75%, BMW BMW, -0.87%, Gap GPS, +1.77%, Huawei, Nike NKE, +1.18%, Samsung 005930, -0.67%, Sony SONY, +9.69%, and Volkswagen VOW, -2.04%.
This hasn’t been sufficient to scare off Wall Street, though. Thanks to exchange-traded funds (ETFs) and other investment products, America’s major investment houses are steadily profiting off of Beijing’s wider ambitions—even if that includes efforts to modernize China’s military.
A good example is CSSC Holdings Ltd. 600150, -0.19% (CSSC), China’s largest builder of naval vessels. Thanks to Beijing’s efforts to raise funds through capital markets, CSSC is listed in several major investment indexes. In fact, CSSC was able to raise $8.63 billion from debt markets through 2015, helping it to launch a new Chinese warship—the Fujian—intended to rival America’s largest and most advanced aircraft carrier.
Wall Street’s comfort with helping China finance its military buildup defies common sense. But America’s corporate leaders appear entirely disconnected from the long-term concerns this poses.
Since Wall Street won’t change course, Congress must now step in—particularly to help prevent a potentially costly war in the Pacific.
Congress has the authority to address the transparency, disclosure, and due-diligence requirements of Wall Street and the financial sector—not to mention the ability to create sanctions. And so, step one for Congress should be to ban the sale of any investment products that help to fund China’s military buildup.
The upcoming financial summit in Hong Kong makes clear that Wall Street CEOs will shamelessly pander to Beijing. This is unacceptable. America’s banking executives—who publicly give lip-service to leaving China in the event of a Taiwan invasion—should be confronted with the hypocrisy of their actions. Congress should act to make sure that sanctioned and bad-actor Chinese securities are no longer traded on Wall Street. That’s the only logical response to Beijing’s abhorrent behavior.
Robby Stephany Saunders is the national security adviser at the Coalition for a Prosperous America, a bipartisan advocacy organization representing farmers, ranchers, manufacturers, and labor organizations that make and grow things in the United States. She has previously served as a senior adviser in the U.S. State Department, House, and Senate.