HSBC, headquartered in the UK, has become the first foreign bank to allow a subsidiary investing in China to set up a party cell of the CCP. Analysts believe that the CCP has steadily increased its control over various companies, including infiltration by foreign companies. In fact, HSBC can still choose to move forward or backward.

The British newspaper “Financial Times” on July 21 quoted a source as saying that HSBC Qianhai Securities (a subsidiary of HSBC Holdings, recently established a communist party cell (also known as the party) within the company. This is the first case of a foreign bank doing so.

HSBC Qianhai Securities’ establishment of a CCP branch comes after HSBC raised its stake in the joint venture from 51% to 90% in April.

Seven multinational banks, HSBC, Goldman Sachs, JPMorgan Chase, Credit Suisse, Morgan Stanley, UBS, and Deutsche Bank, have investment banking operations in China. Still, so far, only HSBC has established a Party committee of the CCP in its investment company.

Lan Shu, a commentator on current affairs in the United States, told the Epoch Times on July 22 that it is a public step-by-step process for the CCP to set up party cells in foreign companies. Although this organization was initially only secretly established in foreign companies to facilitate the entry of foreign capital into the party, it later operated more blatantly. “This is also the CCP’s exporting of revolution, which they have never given up.”

According to the CCP’s enterprise law, Chinese companies need to establish CCP cells; at least three Party members can join together to form a party cell. However, foreign companies’ management always considers it a term on paper. They are apprehensive about the possibility of their strategic decisions and customer data being captured by the CCP.

Taiwanese financial expert Huang Shicong told the Epoch Times on July 22 that HSBC’s primary market is in China and wants to be a foreign company by CCP standards. However, some foreign companies believe that freedom, democracy, and human rights are more important, worrying that the party cell might leak some important secrets to the outside. Foreign companies will typically have an opinion on this matter.

He Qinglian, a Chinese economist in the U.S., told VOA that the first foreign company to set up a party cell in China was DuPont, an American company that came to Shanghai in 1990. Since then, the CCP has always made efforts to establish party cells. According to statistics, in 2005, there were 11 million workers in foreign companies. Out of 1.6 million foreign companies, 11,600 companies have established Party branches. At the time, the rate was still low.

According to data released by the Organization Department of the CCP Central Committee, by the end of 2016, 70% of foreign-invested enterprises in China had established CCP organizations.

Lan Shu told the Epoch Times that the CCP’s strategy towards foreign and private companies is entirely different. The CCP arbitrarily demands things from private companies. If it wants to hold a controlling stake, it will be satisfied. If it tells private companies to raise money, they will follow. But the presence of foreign companies in China involves a deal between China and Western countries, and punishing one foreign company can scare off ten other foreign companies. Moreover, the CCP has infiltrated foreign companies in various ways, setting up a party cell within the company to give them business opportunities and make money. It can control their companies at the same time.

In 2017, some German companies publicly expressed dissatisfaction with the CCPs’ continued pressure for party cells to have more voices in corporate decision-making. As a result, the German Office for Foreign Trade in China warned that German companies could withdraw from the Chinese market or reconsider their investment decisions.

In August 2017, Reuters interviewed 13 senior executives of foreign companies in China attending a meeting of the European Union Chamber of Commerce in Beijing. Eight interviewees were concerned about the CCP’s increasing interference in the corporate governance of organizations.

Although the CCP State Council at that time stated that the party cell did not interfere in the operations of joint ventures or foreign companies, it was only an advisory organization. But a senior executive from participating companies says some companies have come under “political pressure” and have been asked to amend the terms of joint ventures with mainland state-owned enterprises (SOE) partners. The provisions allow the CCP to have the final decision over business operations and investment decisions. The director said the company’s joint venture partners requested that the agreement be amended to allow party members to participate in the company’s management. Also, to enable the party cell to be included in the company’s budget and to unify one person to serve as chairman of the board of directors and party secretary.

According to the Epoch Times, Lan Shu analyzed that the West has made two mistakes in their policies toward China, causing the difficulties that foreign companies face today. The first is the CCP’s institution, which Westerners think they can deal with using money. The second big mistake is that they consider the CCP an ordinary political party, but the CCP considers the whole western free world as their arch enemy.

“Governments, large companies and NGOs in Western countries don’t understand the nature of the CCP. They think that through investment from the West, (the CCP) will eventually change. This type of thinking is completely wrong. The existence of the CCP is to smash the world of capitalism, this is unchanged,” said Lan Shu.

However, Huang Shicong (Hoang The Minh) believes that foreign companies still have many options. “The CCP wants to have a party cell, but it has to see what the views of foreign companies are,” he said. “If they are willing to consider China an important unit, they must have a party cell; if they feel it is not necessary, do they want to withdraw from the Chinese market? So, you’ve seen a lot of foreign companies pull out of the Chinese market in recent years, and I think this is related to the regime.”

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