China does not want ‘enemies’ over Ukraine war, but wary of US threats to forex assets
- US move to freeze Russia’s foreign currency reserves shows risks of investing in the West are now much higher, says ex-central bank adviser Huang Yiping
- China is caught between a rock and a hard place when it came to following Western sanctions on Russia, says another former adviser Yu Yongding
Two former central bank advisers have said China does not want to make “enemies” over the Ukraine war, while warning about the “underlying risks” facing the country’s foreign reserve assets after Russia’s invasion.
Beijing has refused to condemn Russia’s military aggression and rejected calls from the West to join sanctions on Moscow, which it regards as a strategic partner.
In public statements, China has tried to remain neutral towards the conflict, while calling for a peaceful resolution. But its stance has been criticised by Washington and Brussels.
Huang Yiping, a former member of the People’s Bank of China’s (PBOC) monetary policy committee, said the risks of investing in Western markets are now much higher.
“We don’t want to become anyone’s enemy,” said Huang in an online seminar organised by Renmin University of China on Wednesday. “But honestly, these underlying risks [in foreign assets] have already emerged.”
Beijing does not disclose where it invests its foreign exchange reserves, which amounted to US$3.188 trillion at the end of March, according to the State Administration of Foreign Exchange (SAFE), the foreign exchange regulator.