SocGen cuts China Exposure by 80 million dollars

In the past few weeks, Bloomberg Societe Generale SA has cut its exposure to counterparties on trades in China by about 80 million dollars as global banks try to keep pace with rising geopolitical risks in the world's second-largest economy.

People familiar with the matter said that it has several hundred million dollars in positions on China's Financial Futures Exchange and asked not to be identified as the details are private. The French bank has been trying to replicate those positions elsewhere in Asia, they said.

Like other firms and multi-nationals, the bank's executives are increasingly concerned about a whole swathe of problems hitting China in recent months, although the country remains a key part of its strategy, the people said.

Increased rhetoric between Beijing and Washington over Taiwan has unaffected firms in the past few months, after Russia s war forced the world s largest banks to leave businesses and stop serving some ultra-wealthy clients. The US lawmakers recently increased pressure on banks to answer questions about whether they would withdraw from China if it invaded Taiwan.

A spokesman for SocGen didn't want to say anything. According to the website, the bank's businesses in the Asia-Pacific region range from corporate and investment banking to asset management, securities services and global transaction banking.

The China Financial Futures Exchange offers a wide range of services including the listing, trading, clearing and settlement of financial derivatives.

The exposure of SocGen is relatively small by global banking standards, but it is a reflection of increased risk aversion among firms after years of build up in China.

Over the past few years, Wall Street and European powerhouses have expanded after the nation allowed full ownership of ventures on the mainland. In 2018, the Swiss lender UBS Group AG became the first foreign bank to gain control of a Chinese securities joint venture, while JPMorgan Chase Co. won approval in 2021 to take full ownership of its investment banking venture.

At the same time, China s economy is sputtering because of the country s strict pursuit of Covid Zero, a teetering property market and a multiyear crackdown on private enterprise as President Xi Jinping prepares to take a third term in charge.

US President Joe Biden is expected to ratchet up pressure on China's economy and industries. People with knowledge of the situation said that the administration plans to announce new restrictions on China's access to US semiconductor technology, an escalation of efforts to stifle Beijing's industrial ambitions and a risk to growth for the $550 billion sector.

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