China is undertaking significant measures to brace for possible future US sanctions, such as those placed on Russia’s financial sector, with authorities recently holding an emergency session of domestic and international institutions to discuss how the nation’s overseas assets can be best protected. To counter this, China held secret bank meetings to plan for protecting assets from US sanctions.
The FT reported over the weekend that the internal conference was convened on April 22 and was attended by key officials from China’s central bank and finance ministry. It has also been reported that representatives from every domestic and Chinese overseas bank, as well as some China-related international institutions, including HSBC, were dispatched. The relatively secretive meeting took place as Russia accuses Washington of plundering $300 billion in assets kept abroad.
“Western nations have actually stolen more than 300 billion US dollars from Russia when they seized the money meant to pay for Russian gas, Russian Foreign Minister Sergey Lavrov said in an interview with Al Arabiya TV on Friday,” reported state-run TASS in response to the top diplomat’s statements.
Lavrov recently described US-led Western activities as “shameless robbery” adding, “London, Washington, Brussels are looking at seizing the money they have frozen to transfer it to someone else.”
Indeed, there has been open discussion of using confiscated Russian assets, particularly frozen Russian Central Bank reserves, to reconstruct Ukraine and fund Ukrainian institutions in the future. With Washington’s prodding, European governments have led the way in the seizures.
It seems that China is paying notice and will not sit idly by as its own similar issue looms, particularly as talk over Taiwan and potential similarities with Ukraine heats up. The emergency conference also happened after the Biden administration began explicitly advising Beijing not to serve as a facilitator to Russia’s military machine by supplying it or assisting in sanctions evasion beginning in March. In a March 18 phone call, Biden delivered this warning straight to President Xi Jinping.
Citing official sources out of China, FT details: “…the meeting began with remarks from a senior finance ministry official who said Xi’s administration had been put on alert by the ability of the US and its allies to freeze the Russian central bank’s dollar assets.”
“The officials and attendees did not mention specific scenarios but one possible trigger for such sanctions is thought to be a Chinese invasion of Taiwan, which China claims as its territory and has threatened to invade if Taipei refuses to submit to its control indefinitely,” the report continued.
“If China attacks Taiwan, decoupling of the Chinese and western economies will be far more severe than [decoupling with] Russia because China’s economic footprint touches every part of the world.” an individual informed on the issues discussed at the conference told the Financial Times. Here’s a little more from the report:
Senior regulators including Yi Huiman, chairman of the China Securities Regulatory Commission, and Xiao Gang, who headed the CSRC from 2013 to 2016, asked bankers in attendance what could be done to protect the nation’s overseas assets, especially its $3.2tn in foreign reserves. China’s vast dollar-denominated holdings range from more than $1tn US Treasury bonds to New York office buildings. State-owned Dajia Insurance Group, for example, owns the Waldorf Astoria New York.
Simultaneously, Taiwan appears to be on the opposite side of the Ukraine playbook and the international reaction domino effect.
In a Sunday interview with CNN’s Fareed Zakarai, Taiwan’s Foreign Minister Joseph Wu said, “we try to see what we can learn from Ukraine in defending ourselves.”
As China makes long-term measures for a hypothetical economic war with the West as a consequence of a military conflict with Taiwan, Taipei is focusing only on strategic defense and survival with the help of the West.
“The first is asymmetric capability. Look at the Ukrainians, they use small personal weapons to go against a large enemy. And I think that is something we can learn from. In fact, we have been preparing for that, but we need to make more investment in this regard.”
“The second area we can learn from Ukraine is civil defense. Look at the Ukrainian people,” the foreign minister added. “All of the males are having the determination to defend the country. They want to serve in the military. They want to go to the war zones to fight against Russia. That kind of spirit is enviable for the Taiwanese people.”
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