The U.S. crackdown on Chinese companies in recent weeks has prompted international banks to reduce their exposure to Chinese companies and try to determine what other companies might be targeted by Washington, according to banking sources.
Semiconductor Manufacturing International Corporation (SMIC) is the latest company to be affected by the tensions between the United States and China. A U.S. Defense Department official said last week that Washington could add China’s largest chipmaker to its export control list.
Shortly after the news broke, bankers from an international bank with more than $200 million in outstanding credit with SMIC got together to discuss whether there was a way to get the Chinese company to repay part of its loan early.
An unnamed banker told Reuters that internal discussions about the SMIC loan were ongoing and that no conclusion had been reached on the matter yet.
SMIC did not respond to the reports.
Over the past two years, tensions between the U.S. and China over trade and Chinese telecoms giant Huawei have raised concerns among the business community. In the past few months, international banks’ anxiety over their China portfolios has been further heightened by the introduction of Hong Kong’s National Security Law, US demands that China’s ByteHopping divest its video app TikTok, and now action against SMIC.
Last month, Washington blacklisted 24 Chinese companies and individuals for their alleged involvement in construction and military operations in the South China Sea. It was the first time the United States had imposed such sanctions on Beijing over the disputed strategic waters.
As the U.S. election approaches, the likelihood of action against more Chinese companies will only increase further as President Trump makes national security and his toughness on China a key component of his campaign, financial sources say.
Two senior investment banking executives in Europe told Reuters that they are evaluating their exposure to Chinese technology companies.
They are particularly interested in clients involved in hardware and semiconductors that have operations in the United States, and are trying to assess the risk of those companies being placed on the sanctions list.
New loans to Chinese companies have also slowed. These loans are already under pressure due to concerns about the impact of the neoconazole epidemic on businesses.
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