During his latest press note on China, US Secretary of State Mike Pompeo criticized the Communist Party’s action against the UK.
Key quotes
The United States stands with our allies and partners against the Chinese Communist Party’s coercive bullying tactics.
In the latest example, Beijing has reportedly threatened to punish British bank HSBC and to break commitments to build nuclear power plants in the United Kingdom unless London allows Huawei to build its 5G network.
The CCP’s browbeating of HSBC, in particular, should serve as a cautionary tale. Just last week, the bank’s Asia-Pacific CEO, Peter Wong, a member of the Chinese People’s Political Consultative Conference, signed a petition supporting Beijing’s disastrous decision to destroy Hong Kong’s autonomy and to break commitments made in an U.N.-registered treaty.
That show of fealty seems to have earned HSBC little respect in Beijing, which continues to use the bank’s business in China as political leverage against London.
Beijing’s aggressive behavior shows why countries should avoid economic overreliance on China and should guard their critical infrastructure from CCP influence. Australia, Denmark, and other free nations have recently faced pressure from CCP interests to bow to China’s political wishes.
FX implications
With the trading activity struggling to find a firm direction amid the early Asian session on Wednesday, the news failed to get a major audience. Even so, it negatively affects the market’s risk-tone and adds to the pre-Fed cautious sentiment.
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