Chinese officials are looking at ways to defend the country from economic attack if the West should look to sanction China in the same way it did Russia — stoking fears the nation is preparing for an invasion of Taiwan.
China’s regulators held an emergency meeting on April 22 between officials from China’s central bank, the finance ministry, domestic banks operating within China, and international lenders such as HSBC.
The West’s harsh economic sanctions on Russia prompted the emergency meeting, with the Ministry of Finance stating that President Xi’s administration had been put on alert by the surprise dollar freeze.
The news comes as the UK and the US held top-level talks on how to manage a crisis in Asia, should China invade Taiwan.
China claims Taiwan as part of its territory despite the island nation functioning under a separate government since 1949.
The US is thought to be considering proportionate sanctions on China in the event it invades Taiwan, envisioning a similar scenario to the one playing out in Ukraine.
‘No one on-site could think of a good solution to the problem,’ the Financial Times quoted a source as saying. ‘China’s banking system isn’t prepared for a freeze of its dollar assets or exclusion from the Swift messaging system as the US has done to Russia.’
China is looking to expand the amount of renminbi in circulation relative to its US-dollar holdings.
One idea was to force exporting Chinese businesses to ditch their dollar holdings in exchange for renminbi.
Another suggestion was to cut the $50,000 quota that Chinese nationals are allowed to purchase every year for overseas travel, education and other offshore purchases.