China-US financial war over Hong Kong unlikely given damage it would do to both sides, analysts say
- Washington’s moves to restrict China’s access to US capital markets are ‘skirmishes’ rather than start of all-out financial war, analysts say
- Risk remains that US will impose strong financial sanctions on China for imposing a national security law on Hong Kong
As relations between Beijing and Washington continue to deteriorate, there is growing concern that the United States will start a full-fledged financial war that would limit China’s access to American financial markets and global financing.
While there have been some initial moves to restrict China’s access to US capital markets, analysts agree that a major conflict is not on the cards in the near term, in large part because it would hurt the US as much as China.
Ding Shuang, chief China economist at Standard Chartered, echoed Kennedy’s view, saying that current tensions are more “skirmishes” than a “war”.
02:23
Beijing remains ‘very firm’ on national security law for Hong Kong, says city’s leader Carrie Lam
However, if the US moves to sanction Chinese banks in retaliation for Beijing imposing a national security law on Hong Kong, there would be retaliation, with China possibly sanctioning American companies operating in the country, Ding said. This would be a “lose-lose” situation.
Nevertheless, recent steps by the US can be seen as the opening salvoes in a broader effort to tighten China’s access to US capital markets.