China's anti-sanctions law a new headache for banks in Hong Kong

"I know some of us may be very concerned," Secretary for Justice Teresa Cheung told reporters earlier this month. "But I think we shouldn't be too worried for now."Lam, one of the dozens Chinese officials sanctioned by the United States, has said she would rather the law be passed locally to cater for the city's own legal and business environment. Such assurances are of limited comfort for people like John, a senior manager working for an international bank in Hong Kong, who fear being caught between an American rock and a Chinese hard place. "We have no choice, either we shut the whole bank, which many people don't want to do, or we have to just bite the bullet and continue our businesses," he told AFP, asking to remain anonymous to speak freely. China may be wary of forcing foreign banks out of Hong Kong. The national security law already makes it illegal for companies based there to adhere to foreign sanctions -- something the United States highlighted last month in a rare business advisory warning. 'US DOLLAR TOO IMPORTANT' So far China has not gone after any major international bank using that power, even after Lam complained she has no bank account because of the sanctions. John hopes the same will be true of the broader anti-sanctions law - that it will hover over them but not be used as long as banks tread carefully. "Even when a law has been passed by Beijing, it wouldn't affect our daily operation unless we did something they don't like ... We hope they do not enforce the law," he said. Steve Tsang, director of SOAS China Institute at the University of London, said the immediate impact of the anti-sanctions law "is likely to be limited - at least until the law is enforced". Multinational banks and corporations, he added, tended to carry on as normal "rather than look at the medium to long-term implications of a change in China's policy". "The Chinese government is counting on it. The Communist Party always works on the basis that the capitalist will sell it the rope with which it intends to hang them," he said. John said if push comes to shove, most banks would probably choose Washington over Beijing. "We will comply with the US sanction orders, because the US dollar is too important to a bank," he said. And if that risks violating local laws or being prosecuted? "Foreign enterprises would want to quit Hong Kong, he replied. "They don't necessarily have to open a branch here, they could do it in Tokyo or Singapore."

China's anti-sanctions law a new headache for banks in Hong Kong

"I know some of us may be very concerned," Secretary for Justice Teresa Cheung told reporters earlier this month. "But I think we shouldn't be too worried for now."

Lam, one of the dozens Chinese officials sanctioned by the United States, has said she would rather the law be passed locally to cater for the city's own legal and business environment.

Such assurances are of limited comfort for people like John, a senior manager working for an international bank in Hong Kong, who fear being caught between an American rock and a Chinese hard place.

"We have no choice, either we shut the whole bank, which many people don't want to do, or we have to just bite the bullet and continue our businesses," he told AFP, asking to remain anonymous to speak freely.

China may be wary of forcing foreign banks out of Hong Kong.

The national security law already makes it illegal for companies based there to adhere to foreign sanctions -- something the United States highlighted last month in a rare business advisory warning.

'US DOLLAR TOO IMPORTANT'

So far China has not gone after any major international bank using that power, even after Lam complained she has no bank account because of the sanctions.

John hopes the same will be true of the broader anti-sanctions law - that it will hover over them but not be used as long as banks tread carefully.

"Even when a law has been passed by Beijing, it wouldn't affect our daily operation unless we did something they don't like ... We hope they do not enforce the law," he said.

Steve Tsang, director of SOAS China Institute at the University of London, said the immediate impact of the anti-sanctions law "is likely to be limited - at least until the law is enforced".

Multinational banks and corporations, he added, tended to carry on as normal "rather than look at the medium to long-term implications of a change in China's policy".

"The Chinese government is counting on it. The Communist Party always works on the basis that the capitalist will sell it the rope with which it intends to hang them," he said.

John said if push comes to shove, most banks would probably choose Washington over Beijing.

"We will comply with the US sanction orders, because the US dollar is too important to a bank," he said.

And if that risks violating local laws or being prosecuted?

"Foreign enterprises would want to quit Hong Kong, he replied. "They don't necessarily have to open a branch here, they could do it in Tokyo or Singapore."