China warned to prepare for being cut off from US dollar payment system as part of sanctions like Russia

Fang Xinghai said that as China mainly relies on the US dollar payment system in international deals, it makes it vulnerable to possible US sanctions

The US imposed sanctions on Russia due to numerous events, including the annexation of Crimea by Russia in 2014

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The risk is seen to be low that China will be treated in the same way as Russia, after the US responded to numerous events, including the annexation of Crimea by Russia in 2014. Photo: Reuters

Published: 6:56pm, 22 Jun 2020Updated: 10:42pm, 22 Jun 2020

China must prepare for the risks of being cut off from the US dollar payment system in case the United States sanctions Chinese companies and banks, just like Washington did with Russian institutions, a senior Chinese financial regulator said on Monday.

Fang Xinghai, a vice-chairman at the China Securities Regulatory Commission, said that as China mainly relies on the US dollar payment system in international deals, it makes it vulnerable to possible US sanctions.

“Such things have already happened to many Russian businesses and financial institutions. We have to make preparations early – real preparations, not just psychological preparations,” Fang said at a forum organised by Chinese media outlet Caixin.

Fang’s comment came at a time when Washington is pondering how far it should go to use the US dollar’s key role in international payment to punish Chinese individuals, companies and financial institutions for alleged involvement in issues such as Xinjiang and Hong Kong.

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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), is the backbone for international trade and investment.

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China warned to prepare for being cut off from US dollar payment system as part of sanctions like Russia

Fang Xinghai said that as China mainly relies on the US dollar payment system in international deals, it makes it vulnerable to possible US sanctions The US imposed sanctions on Russia due to numerous events, including the annexation of Crimea by Russia in 2014

Fang Xinghai said that as China mainly relies on the US dollar payment system in international deals, it makes it vulnerable to possible US sanctions

The US imposed sanctions on Russia due to numerous events, including the annexation of Crimea by Russia in 2014