CHINA-ECONOMY: CHINA'S FEARS RISE OF POTENTIAL U.S. PUNITIVE ACTION IN FINANCIAL SECTOR

Reuters reported (August 15) that fears are rising in China of a deepening financial war as relations with the US deteriorate. Chinese officials and economists have in recent months been unusually public in discussing worst-case scenarios under which China is blocked from dollar settlements, or Washington freezes or confiscates a portion of China’s huge U.S. debt holdings. Shuang Ding, head of Greater China Economic Research at Standard Chartered and a former economist at the People’s Bank of China (PBOC) was quoted saying “Yuan internationalisation was a good-to-have. It’s now becoming a must-have", the threat of Sino-U.S. financial “decoupling” is becoming “clear and present”. Fang Xinghai, a senior securities regulator, said at a forum organised by Caixin in June that China is vulnerable to U.S. sanctions and should make “early” and “real” preparations. “Such things have already happened to many Russian businesses and financial institutions.” Guan Tao, former Director of the International Payments Department of China’s State Administration of Foreign Exchange and now a chief global economist at BOC International (China), also said “We have to mentally prepare that the United States could expel China from the dollar settlement system” and Beijing should ready itself for decoupling. Meanwhile, China has fast-tracked plans to develop a sovereign digital currency, while the PBOC has been busy signing currency swap deals with foreign counterparts.





Subscribe to Newswire | Site Map | Email Us
Centre for China Analysis and Strategy, A-50, Second Floor, Vasant Vihar, New Delhi-110057
Tel: 011 41017353
Email: office@ccasindia.org