Financial institutions at risk due to links with Hong Kong, according to an authority in the field
In a roundtable discussion held in Washington on Thursday, Sunny Cheung, a fellow at the Jamestown Foundation, raised concerns about the financial stability of Hong Kong and its potential impact on Taiwan and the United States.
Cheung described Hong Kong as a "financial aircraft carrier" for Beijing, capable of projecting power beyond its borders. Over the years, Beijing has systematically shaped Hong Kong into its international hub for capital and influence. This strategic positioning is now projected to make Hong Kong the world's largest wealth-management hub, surpassing Switzerland.
However, Cheung warned that in a cross-strait crisis, Beijing could potentially hold Taiwanese assets hostage by freezing outbound remittances or diverting capital to fund military operations or stabilize Chinese markets. He suggested that Taiwanese banks' operations in Hong Kong could backfire in such a conflict.
Hong Kong has been a significant offshore center for Taiwan, accounting for about US$700 million, or 45 percent, of Taiwanese lenders' total overseas profits in the first half of this year. Sixty-two out of 71 new listings in Hong Kong this year were mainland enterprises, with nine out of every 10 initial public offering dollars raised coming from Chinese firms.
Cheung urged Washington and its allies to reassess Hong Kong's economic status, suggesting the possibility of revoking its World Trade Organization (WTO) membership. He also emphasized the need for the US to develop a strategy to counter the renminbi's internationalization.
The scholar warned that the next geopolitical financial crisis could begin in Hong Kong. He suggested that Washington must prepare a strategy before a Taiwan crisis forces it into a reactive position.
The source of this information is CNA.
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