https://www.wsj.com/articles/communist-cells-in-western-firms-business-investment-returns-xi-jinping-11657552354?mod=opinion_lead_pos5
The legal and regulatory risk of doing business in China may be about to get a lot higher. The China Securities Regulatory Commission is implementing changes to its rules governing publicly offered securities investment funds. These rules include requiring foreign-owned fund managers such as BlackRock and Fidelity to create Communist Party cells when operating in China.
Many foreign investors have assumed these rules would apply only to Chinese businesses and state-owned enterprises. China analysts, however, have been warning since 2018 that these laws could soon apply to foreign-owned companies operating through Chinese joint ventures. Since 2016, Xi Jinping has pushed for state-run companies and subsidiaries of foreign-owned companies to establish cells through the provisions of the Chinese Communist Party’s Articles of Association.
In September 2020, the General Office of the Communist Party’s Central Committee issued the “Opinion on Strengthening the United Front Work of the Private Economy in the New Era,” which called on the nation’s United Front Work Departments to strengthen their involvement in corporate governance. In response, the European Chamber of Commerce in China cautioned that the strengthening of the role of party cells would “have a considerable impact on business sentiment, and could lead foreign companies to reconsider future and even current investments in China.”
Western financial firms piled into China anyway, attracted by the prospect of high returns and advised by Chinese contacts that engagement with the Communist Party is the price of doing business. Since 2018, foreign businessmen have reported being approached by the party about the establishment of party cells. The secrecy of the United Front Work Department makes it impossible to establish how many such cells exist. In January 2021, HSBC executive Noel Quinn was unable to confirm to the British Parliament’s Foreign Affairs Committee that the bank had no party cells in its branches in Hong Kong and the mainland.