US sanction threats against Chinese banks over Russia trade ties risk ‘gargantuan’ financial instability
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US sanction threats against Chinese banks over their trade with Russia could lead to global financial instability and damage US-China relations. The US is reportedly considering sanctions to pressure China to stop supporting Russia's military production. However, such sanctions would impede transactions in Europe and the US, affecting American companies and investors in China. Removing China from the Swift interbank financial system would cause a significant logjam in trade transactions and clearing, leading to cost-push inflation. China's world trade reached $5.8 trillion in 2023, and its removal from Swift would inconvenience companies abroad. Sanctions against Chinese banks would also accelerate China's efforts to develop its own international payment and clearing system and internationalize the yuan. Broader ties between China and the US would suffer, and it would become impossible to work constructively with China on any issue. The US has preliminarily discussed sanctions on some Chinese banks, but there is no short-term plan to carry out such measures. The exploration of bank sanctions is seen as a calculated bluff and a signal from the US to increase pressure on China over its stance on Russia.
#UschinaRelations #Sanctions #ChineseBanks #RussiaTradeTies #FinancialInstability #SwiftInterbankSystem