Hong Kong security law: China weighs risk US will go for ‘nuclear option’ and cut Beijing from the dollar payment system
- Risks of US financial sanctions emerge for China after National People’s Congress approves national security law for Hong Kong
- Beijing wonders whether Washington will cut it off from US dollar payment system and hasten the demise of dollar hegemony in the process
A new and troubling question is suddenly looming for Beijing: will the Trump administration abuse the power of the US dollar to hurt China following Beijing’s plan to impose a new national security law in Hong Kong?
While the probability remains very low that China will be treated like Russia or Iran, and US President Donald Trump has not mentioned sanctions against Hong Kong or Chinese financial institutions, the risk of a financial war – including being cut off from the US dollar system – is no longer “unthinkable” for China.
If Washington were to sever China’s corporate and financial system from the US dollar payments system, which is underpinned by infrastructure such as the Swift international payments messaging system and the Clearing House Interbank Payments System (Chips), it could start a financial tsunami that would lead global finance into unchartered territory, officials and analysts said.
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Hong Kong is no longer autonomous from China, US determines
The official, who declined to be identified, said this scenario was still regarded in the Chinese capital as a “low probability event” and a last resort. “Such an act would be closer to a hot war than a Cold War,” the source said.
The stakes could not be higher as it could severely alter the world’s economic landscape for years to come.