China’s anti-sanctions law raises risks for global banks and financial firms in Hong Kong
- Anti-sanctions law expected to be adopted into Hong Kong’s mini constitution as soon as Tuesday
- Uncertainties ahead for banks, insurers and asset managers betting big on China’s growth
The law, first adopted for mainland China in June, forms part of Beijing’s answer to the US government’s use of the American financial system – and the US dollar as the world’s dominant trade currency – to achieve political goals internationally through financial sanctions.
It gives the Chinese government, as well as private citizens and businesses, the legal basis to take countermeasures against foreign individuals and entities involved in “discriminatory restrictive measures” that Beijing says “violate international laws and basic norms”.
The question for banks and other financial institutions in Hong Kong is: can they still split the difference and not short circuit their access to the world’s two biggest economies?
“The biggest risk is that once such a system is in place there is a high likelihood it is going to be used, especially if the relations don’t fundamentally change, which is kind of hard to imagine in light of current political relations.”