Reflecting the growing concern among Chinese researchers and officials of an all-out “financial war” between China and the US, with many saying the US side would have a clear advantage thanks to the dominant role of the US dollar in cross-border investments and payments, a senior Chinese economist warned of likely consequences. The South China Morning Post reported (August 12) that Yu Yongding, Senior Fellow with the Chinese Academy of Social Sciences (CASS), said at a forum organised by 'The Beijing News' that one possible scenario would be the US imposing sanctions on Chinese banks, as it did in 2012 to Bank of Kunlun, a regional Chinese lender backed by a Chinese state-owned oil company, for financing deals with Iran. However, he said barring Chinese banks from dealing with the US financial system is only one of many ways that the US could inflict pain on China in the financial realm. “The financial sanctions could be done in a variety of forms, targeting banks or certain industries,” and the US could seize Chinese overseas assets if conflicts break out. “This possibility can’t be ruled out.”

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