FirstFT: HSBC’s China group installs Communist party committee

HSBC has become the first foreign lender to install a Chinese Communist party committee in its investment banking subsidiary in the country, a move that will put pressure on western rivals operating in China to follow suit.

The lender’s China investment bank, HSBC Qianhai Securities, recently established a CCP committee, according to two people familiar with the decision. The move came after HSBC lifted its stake in the joint venture, which it launched in 2015, to 90 per cent from 51 per cent in April.

A CCP committee, which can be made up of several branches, is required by Chinese company law but is not yet widely enforced among foreign finance groups. It is typically formed of three or more employees who are also members of the Chinese Communist party.

HSBC’s move will put pressure on other foreign banks to do the same. Some have been examining whether they are required to do so after taking full ownership of their mainland securities and brokerage operations in the past two years, said several senior people at those institutions.

Seven global banks control investment banking operations in mainland China — HSBC, Goldman Sachs, JPMorgan, Credit Suisse, Morgan Stanley, UBS and Deutsche Bank — however, only HSBC has so far set up a CCP committee, according to multiple people familiar with the matter. The other banks declined to comment.

Executives of US banks are particularly worried about the optics of potentially exposing strategic decisions and client data to the CCP, several told the Financial Times.

Thanks for reading FirstFT Asia. Enjoy your weekend. — Emily

Five more stories in the news

1. Biden says Pentagon does not support Pelosi visit to Taiwan President Joe Biden said the Pentagon did not support a planned visit to Taiwan by Nancy Pelosi, following reports that the Speaker of the House of Representatives was set to become the most senior US politician to visit the country in 25 years.

• More US politics news: Joe Biden has contracted Covid-19 and has started taking Pfizer’s antiviral pill to combat the disease, the White House announced.

2. India elects first tribal group member as president India has elected a tribal woman as its president, making Droupadi Murmu the first from that historically marginalised population and the second female to serve as the country’s head of state. India’s presidency is largely ceremonial but holds some key powers, including the right to appoint the prime minister in the event of a hung parliament.

3. ECB raises rates amid tumult in Italy The European Central Bank has raised interest rates by half a percentage point, pledging to prevent surging borrowing costs from sparking a eurozone debt crisis amid political turmoil in Italy and the resignation of Mario Draghi. The prime minister’s decision to step down has triggered the dissolution of parliament and will push the country into snap elections in September.

4. Big Tech signs up to Indonesia’s strict content law Social media companies including Meta, TikTok and Twitter have registered for a licence at the Indonesian communications ministry under which they might have to censor content and hand over users’ data. Some registered only hours before a deadline at midnight on Wednesday.

5. Millions of tonnes of grain to be released from Ukraine Russian and Ukrainian negotiators have agreed a deal to export millions of tonnes of stranded grain, Turkey has announced, and will meet in Istanbul on Friday to pave the way for an end to the months-long Russian blockade of Ukraine’s Black Sea ports.

How well did you keep up with the news this week? Take our quiz.

The day ahead

January 6 hearing The committee investigating last year’s attacks on the US Capitol is set to hold the last in a series of public hearings. The primetime session is expected to focus on the 187 minutes when rioters entered the Capitol and before former president Donald Trump issued a statement.

World Court to rule on Myanmar case The International Court of Justice is set to rule on whether it has jurisdiction to hear a complaint brought by The Gambia against Myanmar for alleged genocide against its Rohingya Muslim minority. (The Diplomat)

Bolsonaro launches re-election campaign Brazil president Jair Bolsonaro is set to launch his presidential candidacy for the Liberal Party on Sunday, ahead of October elections. However, former president Luiz Inácio Lula da Silva is favoured to win.

What else we’re reading

China reckons with its first overseas debt crisis Our analysis of the financial health of the Belt and Road Initiative — once hailed by Chinese leader Xi Jinping as the “project of the century” — has uncovered a mountain of non-performing loans. In several countries in Asia, Africa and Latin America, the project risks metastasising into a series of debt crises.

How is the jet stream connected to heatwaves across the globe? Scientists are racing to understand whether the band of fast-moving air that controls weather in the mid-latitudes is changing in a way that makes heatwaves more frequent and persistent.

• Go deeper: For more climate change data, sign up to our Climate Graphic: Explained newsletter, delivered every Saturday.

Mystery of Berkshire Hathaway’s ‘phantom’ share surge solved In a new research paper, professors at the University of California, Berkeley, Columbia University and Cornell University said they had uncovered what they described as “phantom, non-existent trading” in the most expensive stock in the US.

Financial exclusion in the UK’s gypsy and traveller community Gypsies and travellers in Britain are already marginalised, but face further problems when it comes to obtaining insurance and banking access. The FT takes a rare inside look at the traveller community to see how it is fighting to overcome financial exclusion.

Why Xi changed tack in his crackdown on Didi China’s economic slowdown made president Xi Jinping’s approach to the ride-hailing group harder to maintain, but his pivot on Didi does not represent a course change away from his larger common prosperity agenda, writes Tom Mitchell.

The science of criticism that actually works Is it really possible to get better at giving — and receiving — constructive criticism? There are three stages we go through when criticised: “fuck you”, “I suck” and then “let’s make it better”. Esther Bintliff looks at how to get to the third stage quicker.

Chess

World chess champion Magnus Carlsen has given up the crown. The 31-year-old Norwegian, world champion since 2013 and the world’s number-one player since 2011, admitted he was “not motivated to play another match”, ending a decade-long reign at the top of the game.