US bank chiefs warn of China exit if Taiwan is attacked
The leaders of JPMorgan Chase, Bank of America and Citigroup have pledged to comply with any request from the US government to withdraw from China if Beijing were to attack Taiwan.
The chief executives of the three largest U.S. banks by assets made the commitments Wednesday during a hearing of the Financial Services Committee in the House of Representatives. They responded to a question from Blaine Luetkemeyer, a Republican congressman from Missouri, about whether they were prepared to withdraw their investments from China in the event of a military assault on Taiwan.
“We will follow the guidelines of the government, which has been working with China for decades. If they change their position, we will change it immediately, just like we did in Russia,” said Brian Moynihan, chief executive of BofA.
His comments were echoed by Jane Fraser and Jamie Dimon, chief executives of Citi and JPMorgan, respectively.
Dimon evoked a sense of patriotism in his response. “We applaud and follow absolutely everything the US government has said, which is all of you, what you want us to do,” he told the committee.
US banks have responded to international condemnation of the Kremlin over its attack on Ukraine by announcing plans to end their operations in Russia. However, China’s economy is much larger than Russia’s and many banks have sought to expand their business in China.
At the end of 2021, Citi had $27.3 billion in exposure to China, including loans and investment securities, five times what it had in Russia. JPMorgan launched a securities joint venture in China in 2011 and only took full ownership last year.
Oppenheimer banking analyst Chris Kotowski said China has always “been seen as a future growth opportunity” for banks and current geopolitical risks could make them more cautious about how much they invest in the country.
“If you’re a CEO and you’re testifying before Congress, and the question is basically, ‘What if China was the next Ukraine? “It will make you want to go very slowly, very deliberately and make sure you don’t have too much capital exposed there at the moment,” Kotowski said.
Multinational companies have become much more concerned about the possibility of conflict in Taiwan over the past 18 months as China has stepped up military activity around the island.
Company executives have asked security experts in Washington about the likelihood of a Sino-US war over Taiwan.
In March 2021, Admiral Philip Davidson, then head of the US Indo-Pacific Command, told Congress he believed China could attack Taiwan by 2027, sparking widespread concern.
President Joe Biden said on Sunday that the United States would send forces to defend Taiwan in the event of a Chinese attack – his fourth warning in the past year and a shift in policy that underscored China’s growing threat to the island.
Over the past two years, the Chinese military has stepped up the number of fighter and bomber exercises it conducts inside Taiwan’s “air defense identification zone.”
In August, the People’s Liberation Army staged spectacular large-scale military exercises, including firing ballistic missiles over Taiwan for the first time, after Nancy Pelosi became the first House Speaker to surrender. in Taipei in 25 years.
China has accused the United States of watering down the “One China” policy, which has existed since the countries normalized relations in 1979 and Washington transferred diplomatic recognition from Taipei to Beijing. Under this policy, the United States recognizes Beijing as the government of China while acknowledging – without endorsing – the Chinese position that Taiwan is part of China.
Pressed by lawmakers to voice support for Taiwan and condemn alleged human rights abuses in China, U.S. bank executives have been reluctant to address countries by name.
“I believe in free democracy everywhere; I will not comment specifically on Taiwan. It is up to the US government to make such statements,” Dimon said.
“‘Condemn’ is a very strong word,” Fraser said, adding that the bank was “distressed” to see human rights abuses happening “all over the world”.
Additional reporting by Imani Moise in New York