A prominent Chinese economist has cautioned that financial sanctions and countermeasures could “become a new battleground” in China-US rivalry, while adding that the chance of Washington launching full-scale financial sanctions against Beijing remained slim.
Lian Ping, chairman of the China Chief Economists Forum, a government advisory think tank, said that although the odds of full-blown measures remain low, Washington could adopt a strategy of “first targeting specific Chinese entities, then gradually expanding the scope to eventually push China out of the US dollar system”.
His remarks, published on Thursday in a post on the think tank’s WeChat social media account, come amid growing concerns that rising China-US tensions – currently centred on trade – could spill over into a financial war.
While warning about the potential for such a conflict, Lian said it would be difficult for the US to implement the full-blown financial sanctions some fear Washington may impose on China – such as cutting it off from the Society for Worldwide Interbank Financial Telecommunication (Swift) system or freezing its US dollar assets.
“Sanctioning China within the Swift system would be akin to pulling down one of its main pillars, which would inevitably inflict serious damage on the system itself,” Lian said, citing China’s standing as the world’s largest trading nation and second-largest investor.
If the Swift system were to exclude China, countries with trade and investment ties to China would shift to using the Cross-border Interbank Payment System (CIPS) – China’s alternative for settlements – which would undermine Swift’s importance, he added.
