US sanctions: economist Yu Yongding flags risk of Chinese bank assets being seized overseas

Name: US sanctions 11 Hong Kong and mainland officials including Hong Kong’s chief executive Carrie Lam
Uploaded: 2020-08-12T14:30:08.000Z
Duration: 3 min 8 s
Description: US sanctions 11 Hong Kong and mainland officials including Hong Kong’s chief executive Carrie Lam

Financial sanctions could come in any form, so Beijing must be prepared for worst-case scenario, says Yu Yongding, a former adviser to China’s central bank

A precedent was set in 2012 when Bank of Kunlun was cut off from the dollar payment system, suffocating its cross-border business

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Yu Yongding, a former member of the monetary policy committee of the People’s Bank of China, said on Wednesday that President Xi Jinping’s strategy of focusing on the domestic market to hedge against a hostile external environment is the right choice in light of sanctions risks. Photo: Bloomberg

Frank Tang

Published: 10:30pm, 12 Aug 2020Updated: 6:50am, 13 Aug 2020

If push comes to shove in their financial row, the United States could not only sanction Chinese banks, but also seize overseas Chinese assets, a prominent Beijing adviser warned on Wednesday.

Yu Yongding, a senior fellow with the Chinese Academy of Social Sciences, a government think tank, said at a forum organised by The Beijing News that one possible scenario would be the US imposing sanctions on Chinese banks, as it did in 2012 to Bank of Kunlun, a regional Chinese lender backed by China’s state-owned oil company, for financing deals with Iran.

However, barring Chinese banks from dealing with the US financial system is only one of many ways that the US could inflict pain on China in the financial realm, said Yu, a former adviser to China’s central bank.

“The financial sanctions could be done in a variety of forms, targeting banks or certain industries,” Yu said, adding that the US could seize Chinese overseas assets if conflicts break out. “This possibility can’t be ruled out.”

Such sanctions have been used before … We must be very careful

Yu Yongding

The recent acts by the Trump administration, such as threatening to ban TikTok if it is not sold to a US buyer, have been “shameless”, Yu said. “It’s really hard for us to anticipate what will come next.”

His warning reflects a growing concern among Chinese researchers and officials of an all-out “financial war” between China and the US, with many saying the US side would have a clear advantage thanks to the dominant role of the US dollar in cross-border investments and payments.

The risks for Chinese banks being sanctioned by the US are becoming real after the Trump administration last week sanctioned 11 mainland and Hong Kong officials, including Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor, for their role in the alleged erosion of Hong Kong autonomy.

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US sanctions 11 Hong Kong and mainland officials including Hong Kong’s chief executive Carrie Lam