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Dollar’s Dominance Gives U.S. Upper Hand in China Fight

F-22Raptor

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China’s latest threat to bar companies with ties to U.S. officials who visit Taiwan points to a weakness for Beijing in its sanctions battle with Washington: It can control its own borders, but the greenback rules the world.



In recent months, the Trump administration has levied sanctions against more than a dozen Chinese officials and restricted access to scores of the country’s companies. The penalties have caused credit card headaches for Hong Kong Chief Executive Carrie Lam and, according to the South China Morning Post newspaper, forced the former British colony’s police credit union to relocate an estimated $1.4 billion of assets to Chinese banks.



Meanwhile, the “firm countermeasures” that Beijing has threatened against U.S. officials including Senators Marco Rubio of Florida and Ted Cruz of Texas have yet to be feltacross the Pacific. None of the dozen American individuals sanctioned since July have received notice of what the penalties would entail, other than the assumption that they wouldn’t be welcomed in China.


“I wear it as a badge of honor, but Beijing’s actions don’t have any impact on me,” said Rubio, a frequent China critic who has been named in sanctions announcements twice this summer.



While China has calibrated its response to minimize the risk of further escalation by President Donald Trump, it’s also limited by the U.S. dollar’s dominance in international finance. The greenback accounted for almost 40% of all SWIFT transactions in July, compared with less than 2% for the renminbi, as the Communist Party resists calls to ease currency controls. That makes it more difficult for multinational banks -- includingChina’s state-run lenders -- to avoid compliance with U.S. sanctions.



The U.S.’s dollar advantage could become even more important if the Trump administration sanctions financial institutions in Hong Kong as authorized by congressional legislation in July, or takes direct action against Chinese banks. Beijing’s strongest weapon remains blocking access to its vast market: Hu Xijin, editor-in-chief of the party’s Global Times newspaper, said Wednesday such a move was being considered for companies with ties to U.S. officials who visit Taiwan.

“China doesn’t have too many tools to implement the sanctions because the U.S. payment system is so prolific and pervasive,” said Edwin Lai, a Hong Kong University of Science and Technology economics professor who specializes in renminbi internationalization. “China is disadvantaged in the sanctions game because its payment system is underdeveloped and yuan internationalization is decades away.”


The U.S.’s financial sanctions also carry fewer risks of backfiring than China’s usual tactic of cutting off market access. The Chinese economy is still reliant on foreign investment and Beijing is wary of moves that could scare off multinationals and scuttle its phase-one trade deal with Trump. Chinese diplomats have in recent weeks expressed a desire to de-escalate tensions ahead of the U.S. presidential election on Nov. 3.

Both sides have so far steered clear of sanctioning top officials, with Trump ruling out measures against potential targets including Vice Premier Han Zheng, people familiar with the matter said in July. While the U.S. has penalized Lam and Politburo member Chen Quanguo over alleged human rights violations, China has targeted lower-level officials such as Ambassador-at-Large for International Religious Freedom Sam Brownback and six members of Congress.


Cruz spokeswoman Maria Jeffrey said the exchange showed that the U.S. has a much stronger sanctions framework, including having a procedure for notifying people that they’ve been targeted. “I guess he can’t go there anymore,” Jeffrey said. “When we ban someone from visas, there’s a human whose job it is to send them a letter saying, ‘Don’t bother coming.’”

The latest U.S. decision to sanction 24 Chinese companies over their alleged roles building military facilities in the disputed South China Sea signals further expansion of the strategy. Major lenders with operations in the U.S., including the Bank of China Ltd., China Construction Bank Corp., and China Merchants Bank Co., have taken tentative steps to comply with U.S. sanctions.


Further escalation could involve seizures of U.S.-based assets, Yu Yongding, a senior fellow at the Chinese Academy of Social Sciences, told a forum organized by the Beijing News newspaper on Aug. 12. “This possibility can’t be ruled out,” Yu said, citing penaltiesimposed on the Bank of Kunlun in 2012 over Iran ties.

The U.S. also has the nuclear option of cutting China off from the U.S. dollar system, said Ding Shuang, chief economist for greater China and north Asia at Standard Chartered Plc, which would leave China unable conduct any transactions in dollars. “The danger of this occurring is one of the key reasons that China may accelerate the renminbi internationalization,” Shuang said.



China has other tools to deploy, if ties deteriorate badly enough to justify broader economic damage, including unloading Treasuries or blocking exports of rare earths and other key manufacturing components. Beijing could also roll back cooperation on sanctions against North Korea and Iran.


“There is definitely a risk that Chinese banks are going to get caught up in this because we’re seen a lot of media reports on these sanctioned individuals having to close down bank accounts and shift businesses to Chinese banks,” Charlene Chu, a senior analyst at Autonomous Research, told Bloomberg Television on Wednesday. “Some of the sanctions Chinese banks could be subject to could have a significant impact on their ability to access U.S. dollars.”

For China to gain global financial leverage, it needs to open its capital account to encourage greater use of the yuan, said Scott Kennedy, a senior adviser and trustee chair in Chinese business and economics at the Center for Strategic and International Studies. The cost would be giving investors some ability to influence China’s exchange rates.

“Until Beijing changes the underlying calculus, China will not be able to incorporate financial restrictions into its coercive diplomacy toolkit,” Kennedy said.

https://www.bloomberg.com/news/arti...gives-u-s-upper-hand-in-china-sanctions-fight
 
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Lol. American now has reduce to produce self delusion article to make themselves feel good.
Dude , OP onlyy post opinion pieces. Just ignore it. Opinion is worth less than shit.
 
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Look like someone got triggered by my honesty and start calling anyone who disagree with captain americunt a Chinese brigade.

Looks like someone can’t handle the facts in the article and has to falsely accuse another of posting opinion pieces.
 
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I almost never post opinion pieces. It seems the Chinese Brigade and their bootlickers can’t handle reality.:lol:

Seems like america can't handle the reality ...

- 36 million americans unemployed, the figure is from May 2020. However, those who wanted to return to employment have menial jobs worth nothing.


- american economy has contracted over 30% and will continue to do so. A grave possiblity exists that the trend is irreversible. Despite this, Wall Street continues to post delusional bullish gains, inflating america's super rich while the rest of america continues to sink into poverty.


Reality is that america is gradually and assuredly becoming skinned to bones. Select few reap the dividends, Wall Street, Hollywood, Military Industrial Complex, Lobbying Firms and U.S Congress.
 
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China’s latest threat to bar companies with ties to U.S. officials who visit Taiwan points to a weakness for Beijing in its sanctions battle with Washington: It can control its own borders, but the greenback rules the world.



In recent months, the Trump administration has levied sanctions against more than a dozen Chinese officials and restricted access to scores of the country’s companies. The penalties have caused credit card headaches for Hong Kong Chief Executive Carrie Lam and, according to the South China Morning Post newspaper, forced the former British colony’s police credit union to relocate an estimated $1.4 billion of assets to Chinese banks.



Meanwhile, the “firm countermeasures” that Beijing has threatened against U.S. officials including Senators Marco Rubio of Florida and Ted Cruz of Texas have yet to be feltacross the Pacific. None of the dozen American individuals sanctioned since July have received notice of what the penalties would entail, other than the assumption that they wouldn’t be welcomed in China.


“I wear it as a badge of honor, but Beijing’s actions don’t have any impact on me,” said Rubio, a frequent China critic who has been named in sanctions announcements twice this summer.



While China has calibrated its response to minimize the risk of further escalation by President Donald Trump, it’s also limited by the U.S. dollar’s dominance in international finance. The greenback accounted for almost 40% of all SWIFT transactions in July, compared with less than 2% for the renminbi, as the Communist Party resists calls to ease currency controls. That makes it more difficult for multinational banks -- includingChina’s state-run lenders -- to avoid compliance with U.S. sanctions.



The U.S.’s dollar advantage could become even more important if the Trump administration sanctions financial institutions in Hong Kong as authorized by congressional legislation in July, or takes direct action against Chinese banks. Beijing’s strongest weapon remains blocking access to its vast market: Hu Xijin, editor-in-chief of the party’s Global Times newspaper, said Wednesday such a move was being considered for companies with ties to U.S. officials who visit Taiwan.

“China doesn’t have too many tools to implement the sanctions because the U.S. payment system is so prolific and pervasive,” said Edwin Lai, a Hong Kong University of Science and Technology economics professor who specializes in renminbi internationalization. “China is disadvantaged in the sanctions game because its payment system is underdeveloped and yuan internationalization is decades away.”


The U.S.’s financial sanctions also carry fewer risks of backfiring than China’s usual tactic of cutting off market access. The Chinese economy is still reliant on foreign investment and Beijing is wary of moves that could scare off multinationals and scuttle its phase-one trade deal with Trump. Chinese diplomats have in recent weeks expressed a desire to de-escalate tensions ahead of the U.S. presidential election on Nov. 3.

Both sides have so far steered clear of sanctioning top officials, with Trump ruling out measures against potential targets including Vice Premier Han Zheng, people familiar with the matter said in July. While the U.S. has penalized Lam and Politburo member Chen Quanguo over alleged human rights violations, China has targeted lower-level officials such as Ambassador-at-Large for International Religious Freedom Sam Brownback and six members of Congress.


Cruz spokeswoman Maria Jeffrey said the exchange showed that the U.S. has a much stronger sanctions framework, including having a procedure for notifying people that they’ve been targeted. “I guess he can’t go there anymore,” Jeffrey said. “When we ban someone from visas, there’s a human whose job it is to send them a letter saying, ‘Don’t bother coming.’”

The latest U.S. decision to sanction 24 Chinese companies over their alleged roles building military facilities in the disputed South China Sea signals further expansion of the strategy. Major lenders with operations in the U.S., including the Bank of China Ltd., China Construction Bank Corp., and China Merchants Bank Co., have taken tentative steps to comply with U.S. sanctions.


Further escalation could involve seizures of U.S.-based assets, Yu Yongding, a senior fellow at the Chinese Academy of Social Sciences, told a forum organized by the Beijing News newspaper on Aug. 12. “This possibility can’t be ruled out,” Yu said, citing penaltiesimposed on the Bank of Kunlun in 2012 over Iran ties.

The U.S. also has the nuclear option of cutting China off from the U.S. dollar system, said Ding Shuang, chief economist for greater China and north Asia at Standard Chartered Plc, which would leave China unable conduct any transactions in dollars. “The danger of this occurring is one of the key reasons that China may accelerate the renminbi internationalization,” Shuang said.



China has other tools to deploy, if ties deteriorate badly enough to justify broader economic damage, including unloading Treasuries or blocking exports of rare earths and other key manufacturing components. Beijing could also roll back cooperation on sanctions against North Korea and Iran.


“There is definitely a risk that Chinese banks are going to get caught up in this because we’re seen a lot of media reports on these sanctioned individuals having to close down bank accounts and shift businesses to Chinese banks,” Charlene Chu, a senior analyst at Autonomous Research, told Bloomberg Television on Wednesday. “Some of the sanctions Chinese banks could be subject to could have a significant impact on their ability to access U.S. dollars.”

For China to gain global financial leverage, it needs to open its capital account to encourage greater use of the yuan, said Scott Kennedy, a senior adviser and trustee chair in Chinese business and economics at the Center for Strategic and International Studies. The cost would be giving investors some ability to influence China’s exchange rates.

“Until Beijing changes the underlying calculus, China will not be able to incorporate financial restrictions into its coercive diplomacy toolkit,” Kennedy said.

https://www.bloomberg.com/news/arti...gives-u-s-upper-hand-in-china-sanctions-fight
Everyone can have opinions but the reality from recent statistics didn't show any US "upper hand" at all, all figures suggest US is in a downward spiral.
 
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Militarily the US can’t do a damn thing to China. China is not Iraq. Impossible to defeat China in a military confrontation. This is a dead end.

Diplomatically the US can’t isolate China. US is constantly defeated in UN votes and even their allies are ignoring them diplomatically. This is another dead end.

US lost the economic war with China during the tariffs back and forth. Chinese manufacturing and consumer market is too big and too influential. China is the largest manufacturing nation and largest consumer market in nearly every goods category and many in services category. Every company and country need the Chinese market for growth. China won this battle. US have figured out this is a dead end too.

Now the US has shifted to the technology front especially semiconductor, software and commercial jet engines. Once China achieves self-sufficiency in these 3 sectors, US has no more technology leverage over China. This is the current battle.

The final frontier battle will be in the financial front. The dollar gives the US sanctioning power since the dollar is widely used and dollar clearing must be done in the US through CHIPS/Fedwire. Once China fully adopts the CIPS yuan clearing system everyone will be able to bypass the CHIPS dollar clearing system. This will dismantle the US power to sanction countries and individuals around the world. The financial war will be the ultimate battle.

China is systematically dismantling the American empire and the Americans are too stupid to figure it out.
 
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China’s latest threat to bar companies with ties to U.S. officials who visit Taiwan points to a weakness for Beijing in its sanctions battle with Washington: It can control its own borders, but the greenback rules the world.



In recent months, the Trump administration has levied sanctions against more than a dozen Chinese officials and restricted access to scores of the country’s companies. The penalties have caused credit card headaches for Hong Kong Chief Executive Carrie Lam and, according to the South China Morning Post newspaper, forced the former British colony’s police credit union to relocate an estimated $1.4 billion of assets to Chinese banks.


WOW!!! carrie Lam cannot use a credit card. She now has to carry dollars or Euros, while travelling overseas
Bang-Bang play by US.

She initially reacted to this saying he has no dollars & don't care.

At the time the sanctions were initially announced, Lam reportedly said she would “laugh it off” if the US sanctioned her.

“I do not have any assets in the United States nor do I long for moving to the United States,” Lam said then.



It is not easy going against US.
Bill Browder is a genius.
 
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Seems like america can't handle the reality ...

- 36 million americans unemployed, the figure is from May 2020. However, those who wanted to return to employment have menial jobs worth nothing.


- american economy has contracted over 30% and will continue to do so. A grave possiblity exists that the trend is irreversible. Despite this, Wall Street continues to post delusional bullish gains, inflating america's super rich while the rest of america continues to sink into poverty.


Reality is that america is gradually and assuredly becoming skinned to bones. Select few reap the dividends, Wall Street, Hollywood, Military Industrial Complex, Lobbying Firms and U.S Congress.

Another chicken little post predicting the downfall of US economy/dollar. And like chicken little, it was just in his imagination. US has survived — and thrived — in the face economic hardship worse than COVID-19.
 
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Another chicken little post predicting the downfall of US economy/dollar. And like chicken little, it was just in his imagination. US has survived — and thrived — in the face economic hardship worse than COVID-19.

What can I say, it's not even amusing anymore to say some idiots continue to believe that the american economy is still dominant. It's not, and idiots like yourself keep living in that fantasy world where things are just as they use to be when america dominated the world because of the petrodollar. That's not the case anymore, besides that, Russia and China have countered america's economic weapons (WB/IMF, IPS-SWIFT, Petro-$) by developing their own.

The only reason why I am responding to your post is so that my fellow countrymen (Pakistanis) can update themselves on how to respond to morons like you. So don't flatter yourself over this post.

Below is a link to news headlines published, stating america's economic contraction is the worst in recorded history.


So much for your "US has survived — and thrived — in the face economic hardship worse than COVID-19." Nice try cluckin chicken, now run back to your coop and try again.
 
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They just print more USD out of thin air recently which is bound to affect the current system, this makes the new Chinese system more attractive.
 
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