China wary of Russia-type sanctions, but Beijing’s ‘financial nuclear bombs’ are a powerful deterrent

Economy-crippling sanctions imposed by the West on Russia are a ‘textbook warning for China’ if it helps its neighbour or follows through with Taiwan threats

But China is so involved in global trade that severing ties seems very unlikely, and some Western trade partners may not follow US-led moves to punish Beijing

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If the West imposes sanctions on China like those levied against Russia, some analysts say the impact could be far more damaging to the Chinese economy. Illustration: Perry Tse

Published: 12:00am, 4 May 2022Updated: 9:25am, 4 May 2022

Punishing the world’s second-largest economy with destructive financial and economic sanctions – such as expelling China from the international Swift payment system and freezing foreign reserves – had never been publicly considered an option by Washington.

But that changed when they were levied against Russia for its invasion of Ukraine.

Now, the breadth of those sanctions, and the speed at which they were applied, have given Beijing a glimpse of what it could face if it offers support to Moscow or tries to forcefully reunify Taiwan with the Chinese mainland.

However, Russia is no China, whose economy is about 10 times larger and much more closely intertwined with the rest of the world.

China remains highly dependent on foreign trade and has the world’s largest foreign exchange reserves – worth US$3.25 trillion – much of which is stored in the United States and Europe.

“The expansive economic sanctions that US-led Western countries have imposed on Russia can be seen as a textbook warning for China – on how far [the sanctions] can go,” said He Weiwen, former economic and commercial counsellor at the Chinese consulates in New York and San Francisco.

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