Jia Kang: foreign banks may cooperate with us long arm jurisdiction at the expense of Chinese Enterprises

 Jia Kang: foreign banks may cooperate with us long arm jurisdiction at the expense of Chinese Enterprises

Jia Kang

With the vigorous development of Chinas reform and opening up, the overseas investment of Chinese enterprises is the capital output upgraded by the export of goods, labor services and technology in the process of going out to the world. Under the situation that the world is facing the unprecedented changes in a century, Sino US trade frictions and the global epidemic of the new epidemic situation have worsened the global investment environment, and the overseas investment risks of Chinese enterprises are rising, it is an inevitable choice to create a new development pattern with domestic circulation as the main body and domestic and international dual circulation promoting each other. In the dual cycle, further deepening reform and expanding opening-up is the essence of coping with the complex domestic and international environment and promoting the further development of Chinas economic society on the path of modernization, including Chinese enterprises more active going out, entering the international market and participating in overseas investment. In this process, cooperation with international financial institutions and development of related business is essential. In response, in recent years, Chinas financial industry has also accelerated the pace of opening up.

However, in recent years, with the Chinese enterprises going out to sea, some risk related problems are worthy of our full attention.

First, the United States has a long history of layout. When Chinas financial system is not perfect, it makes enterprises in a weak state of risk control. Only by establishing a more perfect risk control system can we strengthen the control and management of financial risks.

Third, foreign banks may cooperate with us long arm jurisdiction at the expense of Chinese enterprises. The key evidence in Meng Wanzhou case comes from HSBC, a famous foreign bank that Huawei has cooperated with for many years in the process of going abroad. According to the financial times, after being targeted by the US Department of justice for its own problems, HSBC agreed to cooperate with the US Department of Justice investigation in other cases in order to escape punishment. Huawei became the victim of such cooperative transaction. According to Chinese media reports, in 2013, a senior executive of HSBC asked Meng Wanzhou to go to Hong Kong to record the conversation. Afterwards, he went to the PPT and other documents used by Huawei to prove that he did not have any non-compliance. He handed it over to the United States to find out. Without any explanation, he ended the cooperative relationship with Huawei. HSBC argued that it could not resist the request and investigation of the US Department of justice, which reflects some of its difficulties, but also means that foreign banks are subject to the long arm jurisdiction of the United States at any time and may sacrifice Chinese customers for the protection of their own interests at any time.

Under the double cycle of open development, economic and financial security is the lifeblood. On July 30, this year, the Political Bureau of the Central Committee emphasized that the economic and social development in the period of the 14th five year plan must pay more attention to security. The reality shows that, with the Chinese enterprises going out and opening up, we must accelerate the internationalization process of financial supervision, stick to the bottom line to prevent financial risks and fully guarantee the safety of Finance and enterprises.

Obviously, while enhancing the risk awareness of enterprises (especially those deeply involved in Globalization) and guiding them to choose safe financial partners, China also needs to establish an effective prevention, early warning and supervision mechanism in the process of foreign financial introduction, so as to avoid attracting wolves into the house. One of our important responsibilities as researchers is to use our professional knowledge to study and explore all aspects of risk prevention related to overseas investment of Chinese enterprises, especially some prominent problems that can be felt.

For another example, Chinas regulatory authorities have already published the list of unreliable entities in September this year. According to the global times, HSBC may become the first foreign company to be included in the list of unreliable entities, which makes investors doubt whether it is possible for the bank to continue to develop in mainland China and Hong Kong, China, where it mainly operates. On October 13, 2020, the Chinese Ministry of Finance issued an order this week, and more than 10 institutions were selected as the Underwriters and Book Managers of the US $6 billion sovereign bonds. As Hong Kongs largest currency issuing bank, HSBC did not appear on the Underwriters list, which was also after the Chinese government resumed issuing US dollar sovereign bonds in 2017 For the first time. As researchers, our interpretation of this information is Chinas prevention of corporate financial risks. Logically, it includes countermeasures against foreign financial institutions that deliberately disclose important financial information and seriously damage Chinas interests, as well as some form of punishment. As a risk prevention and control mechanism, how to further improve it is also worthy of further understanding and discussion.

Many problems like this will involve professional analysis and in-depth investigation from different angles of economy, law, politics and society. While considering the risk prevention, our thinking orientation should not go to the extreme closed door policy; while it is necessary to emphasize the complex and severe situation that has not undergone major changes in the past 100 years, and therefore it is necessary to rely more on the internal circulation as the main body, we should maintain a full and profound understanding of the necessity and necessity of the mutual promotion of internal and external circulation, With a rational understanding framework, we should grasp the organic connection between deepening Chinas supply side structural reform, building a modern economic system, and promoting the construction of a community of common destiny for mankind in the world, and continue to promote the peaceful development and peaceful rise of Chinas modernization.

(this article is organized from Jia Kangs speech at the Symposium on financial risk prevention of overseas investment of Chinese enterprises)

Produced by Netease Research Bureau (wechat official number: wyyjj163)

Netease Research Bureau is a financial and professional think tank created by Netease News. It integrates the original multimedia matrix of NetEase Finance and economics, relies on the wisdom of hundreds of top economists at home and abroad, conducts rational and objective analysis and interpretation on hot topics of economics, and creates a leading financial think tank with attitude. Welcome to contribute (contribution email: [email protected] uff09u3002

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