China is working to protect its overseas assets amid fears the United States could impose Russia-style sanctions.

Xi Jinping showed loyal support for Vladimir Putin amid Russia’s invasion of Ukraine.

Kevin Frayer/Getty Images

  • Chinese officials are meeting with banks to find ways to protect offshore assets.
  • The country is said to be concerned that the United States could impose sanctions similar to those on Russia.
  • China is said to have around $3.2 trillion in foreign exchange reserves.
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China is reportedly taking steps to protect its assets abroad, amid fears the country may one day be subject to sanctions similar to those imposed on Russia.

The Russian invasion of Ukraine has provided harsh lessons for China, which is also involved in a longstanding dispute with Taiwan. China has long rejected its neighbor’s claims of sovereignty, fueling speculation that it will one day invade and annex Taiwan entirely.

The United States and other Western nations have imposed sanctions against Russia in a bid to stop Putin’s war in Ukraine. The sanctions include a ban on SWIFT, an outright blockade of large Russian financial institutions, measures targeting Russia’s sovereign debt, and even sanctions against oligarchs and their families.

According to the Financial Times, Chinese officials recently held an emergency meeting with domestic and foreign banks to discuss how the state could protect its assets, should it ever face similar sanctions.

People familiar with the conference, which took place on April 22, told the FT that the meeting was made up of officials from China’s central bank and finance ministry, executives from dozens of local and international lenders such as HSBC, and representatives from other banks. nationals operating in China.

A source told the newspaper: “If China attacks Taiwan, the decoupling of the Chinese and Western economies will be much more severe than [decoupling with] Russia because China’s economic footprint touches every part of the world.”

China and Russia are working on a local alternative to the SWIFT payment system: the Russian Financial Message Transfer System and the China Cross-Border Interbank Payment System.

According to the South China Morning Post, China has $3.2 trillion in foreign exchange reserves. The FT reported that high-level regulators, including Yi Huiman, chairman of the China Securities Regulatory Commission, and Xiao Gang, who headed the CSRC from 2013 to 2016, asked bankers how they could protect their offshore assets.

“They are watching with great interest to see how effective sanctions applied to Russia could be effectively applied to China,” Douglas H. Paal, a nonresident scholar at the Carnegie Endowment for International Peace, told Insider in March.

“If there is an invasion of Taiwan, China would expect the US to invoke as wide a range of sanctions as possible.”

Andrew Collier, managing director of Orient Capital Research in Hong Kong, told the newspaper that the Chinese government was right to worry “because it has very few alternatives and the consequences [of US financial sanctions] They’re disastrous.”

Insider has reached out to the Chinese Foreign Ministry for comment.

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