For a man who spent more than three decades in the diplomatic service, HSBC’s head of public affairs Sir Sherard Cowper-Coles seems to have a terrible habit of putting his foot in it.
First came news of an ill-informed claim at a closed-door event in London that the Government was “weak” because it was allowing itself to be strong-armed by the US into cutting back business dealings with China.
Of course, Sir Sherard is entirely impartial, unless you count HSBC’s continued kow-towing to Beijing, not to mention his role as chairman of the China-Britain Business Council. Still, at least he was gracious enough to apologise “for any offence caused”.
Then it emerged that Sir Sherard – who served as British ambassador to Israel, Saudi Arabia, and finally Afghanistan in the 2000s – had seemingly gone one better by insulting an entire ethnic group.
“The Arab mind is empty compared to the Chinese,” he reportedly said at an Oxford University dinner in July, whereupon presumably every jaw in the room immediately hit the table. A decision not to stand for re-election as the UK chairman of the Saudi-British Joint Business Council was probably prudent.
News that this walking, talking PR-disaster zone will step down from HSBC next month seems equally inevitable. Sir Sherard’s position was untenable. But what it shows is that the thin line HSBC is trying to walk between UK and China is in danger of going precisely the same way.
If not now, then later, the question that the bank will eventually be forced to confront is whether its fealty to China is becoming too costly. For now, HSBC bosses clearly think that is not the case and that it can continue to reconcile the demands of Westminster and Beijing at a time when relations between East and West remain fraught with distrust and moments of outright hostility.
In fact, it very much seems like business as usual for HSBC in China.
According to reports, the bank is in talks to buy the Chinese consumer wealth management arm of American financial giant Citigroup, which manages roughly $4bn (£3.3bn) in assets for high net-worth individuals. The business serves wealthy clients worth between $100,000 and $1m, according to The Wall Street Journal.
While Citigroup is looking to pare back its presence in Asia, HSBC is determined to do the opposite, doubling down on a region that now accounts for 70pc of group profits at the last count.
Yet HSBC risks becoming an outlier. Last month, on a high-speed train to Shanghai from Beijing, US Commerce Secretary Gina Raimondo told reporters that American companies had complained about China becoming “uninvestable” because of the heightened risk of doing business in the world’s second-largest economy.
She provided a long list of concerns ranging from intellectual property theft and state enterprise subsidies, to fines and raids on offices, changes to counter-espionage laws, and unclear data and privacy rules. Raimondo also pointed out that she was among a group of US officials whose emails were hacked earlier this year by a group that Microsoft says is operating out of China.
A claim from HSBC chairman Mark Tucker that a historic “ice-breaking” spirit adopted by British businesses would help UK and China overcome tensions sounds like wishful thinking, and an attempt to quickly move on.
The reality is that HSBC can’t afford to let a new Cold War between China and the West stand in the way – it is simply making far too much in the country to allow international relations to triumph over hard-nosed commerce.
Yet that surely isn’t a sustainable long-term position for an organisation of HSBC’s size and importance to adopt. The bank is stuck in the vice-like grip of geopolitics, where it will find itself being squeezed harder and harder until something has to give.
The world’s only two true superpowers are on a collision course despite an apparent detente after Raimondo insisted that Washington isn’t “targeting China” after the US blocked Beijing’s access to advanced semiconductors through export controls.
“We’re targeting actions and behaviour that undermine US national security,” she told Chinese officials. For its part, Shanghai Communist Party Secretary Chen Jining said a stable relationship between China and the United States was crucial for the world.
However, despite all the belated diplomatic platitudes, the shadow of Taiwan looms as large as ever. Beijing believes steadfastly in its right to reassert claims to sovereignty over the island, but Taiwan president Tsai Ing-wen has vowed to protect its sovereignty. Joe Biden meanwhile has said US forces would defend Taiwan in the event of a Chinese invasion.
If that sounds irreconcilable, the thought of all-out military conflict seems unthinkable. But at the very least, Washington would have to respond with harsh financial sanctions to any attempt by China to take Taiwan by force.
Even HSBC would struggle to ride that one out. Such a move would almost certainly prevent any Western bank from continuing to do business in China. HSBC risks blundering into a trap.