Escalating U.S.-China tensions have led to concerns about the possibility of Chinese asset seizures abroad, according to a senior advisor to Beijing.
Yu Yongding, a senior fellow at government think tank Chinese Academy of Social Sciences, said during a forum that Beijing has limited options in the financial conflict with Washington and that it must prepare for the worst-case scenario.
On asset seizures abroad, Yu noted that the «possibility can’t be ruled out» adding that sanctions could be rolled out in various forms targeting banks or other industries.
Moves on Banks
Yu cited the example of Bank of Kunlun and the suffocation of its cross-border business from inaccessibility to the dollar payment system after the U.S. Department of Treasury slapped sanctions in 2012 over oil financing dealings with Iran.
«Such sanctions have been used before,» Yu said. «The US could continue to use them in the future. We must be very careful.»
Yu, a former monetary policy committee member with the People’s Bank of China, even said Washington could «extort» Chinese banks by issuing large fines to pressure them for compliance.
Post-Sanction Ripples
Banks of all forms that require access to the U.S. financial system or links to the 11 sanctioned individuals have been actively reviewing their operations to assess for risk and compliance with varying levels of caution.
Even Chinese banks are reportedly turning cautious – including Bank of China, China Construction Bank and China Merchants Bank – with at least one suspending account-opening activities for the sanctioned individuals.
Elsewhere, Chinese banks have even suggested abandoning certain payment systems altogether. Last month, a report by Bank of China International called for greater usage of China’s Cross-Border Interbank Payment System (CIPS) instead of the Belgium-based SWIFT system. This was not only to address the risk of sudden loss of SWIFT access but also to reduce exposing Chinese global payment data to the U.S.
