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China meets banks to discuss protecting assets from US sanctions

Chinese regulators have held an emergency meeting with local and foreign banks to discuss how they can protect state assets abroad from U.S.-led sanctions similar to those imposed on Russia over its invasion of Ukraine, according to people familiar with the discussion.

Officials fear the same measures could be taken against Beijing in the event of a regional military conflict or other crisis. President Xi Jinping’s administration insisted Strong support for Vladimir Putin Throughout the crisis, however, Chinese banks and companies remained apprehensive about making any deals with Russian entities that could impose U.S. sanctions.

The internal conference, held on April 22, included officials from China Central Bank And the Treasury, as well as executives from dozens of local and international lenders like HSBC, the people said. The Ministry of Finance said at the meeting that all the major foreign and domestic banks operating in China were represented.

They added that the meeting began with remarks by a senior Finance Ministry official who said that Shay’s administration had been put on alert from the ability of the US and its allies to freeze the dollar assets of the Russian central bank.

Officials and participants did not mention specific scenarios, but one possible cause for such sanctions is a Chinese invasion of Taiwan, which China claims it has invaded and threatened to invade if Taipei refuses to surrender to its control indefinitely.

“If China is attacking TaiwanThe disconnection of the Chinese and Western economies will be much more severe than that [decoupling with] Russia that China’s economic footprint is affecting all parts of the world, “said one of the people briefed on the meeting.

Andrew Collier, CEO of Orient Capital Research in Hong Kong, said the Chinese government was right in its concern “because it has very few alternatives and implications [of US financial sanctions] They are disastrous. “

Senior regulators, including Yi Hoyman, president of China’s Securities Regulatory Commission, and Xiao Gang, who headed the CSRC from 2013 to 2016, asked attending bankers what could be done to protect the country’s assets abroad, particularly $ 3.2 billion in reserves Its outside.

China’s huge holdings in dollars range from more than $ 1 million in US bonds to New York office buildings. The state-owned Degia Insurance Group, for example, owns the Waldorf Astoria New York.

“No one on the site could have thought of a good solution to the problem,” said another person briefing on the meeting, “China’s banking system is not ready to freeze its dollar assets or exclude it from Swift’s messaging system as the US did. We will go to Russia. “

HSBC did not respond to a request for comment.

Some bankers have suggested that the central bank may require exporters to exchange all of their foreign exchange earnings for renminbi to increase its holdings in the land dollar. Exporters are now allowed to keep some of their foreign exchange profits for future use.

Others have offered “significant” cuts in the $ 50,000 quota that Chinese citizens are allowed to purchase each year for overseas travel, education and other overseas purchases.

When one clerk asked Chinese bankers if they could diversify into more assets denominated in yen or euros, they replied that the idea was impractical.

However, some current bankers have questioned whether Washington will ever be able to afford to sever economic ties with China given its position as the second largest economy in the world, huge holdings of dollar assets and close trade relations with the US.

“It is difficult for the United States to impose massive sanctions on China,” Collier agreed. “It is like a mutually guaranteed annihilation in a nuclear war.”

Another report by Tabby Kinder in Hong Kong

China meets banks to discuss protecting assets from US sanctions Source link China meets banks to discuss protecting assets from US sanctions

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