When Liu Xiaoming, China's ambassador to the UK, gave an address at HSBC's Chinese new year party in February, he was full of praise for the bank. Speaking in the walnut-panelled United Nations Ballroom at the Four Seasons hotel in London, he lauded the company for "spreading confidence in China through its concrete actions".

Following the speech, Liu and Mark Tucker, HSBC's chairman, smiled for the cameras beneath the chandeliers, accompanied by two dancers in bright red dragon costumes. But the bonhomie in the ballroom came at a difficult juncture for relations between Beijing and HSBC, which has made expansion

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