What If the US Restricts China's Dollar Payments? ... Concerns Over Financial Sanctions Risk

[Image source=Yonhap News]

[Asia Economy Beijing=Special Correspondent Park Sun-mi] There are opinions that if China continues to provoke the United States, the US may impose financial sanctions by excluding China from the dollar payment system.

On the 2nd, Hong Kong's South China Morning Post (SCMP) reported that concerns are rising that the US administration may use the overwhelming power of the dollar to harm China due to China's push to legislate the Hong Kong National Security Law (Hong Kong Security Law). This is described as a 'nuclear option' that could damage both China and the US, potentially escalating the US-China conflict into a financial war.

Although the possibility of China being treated like Iran or Russia by the US is very low, and President Trump has not yet mentioned direct sanctions on Hong Kong or Chinese financial institutions, the US playing the trump card of 'banning dollar payments' against China is a concern that China should consider at least once.

Financial experts worry that if the US government excludes Chinese companies and financial systems from the international payment system network Swift and the dollar payment system (Chips) operated by the New York Clearing House, the global financial system could fall into chaos and a financial tsunami could occur.

Experts believe that if the US imposes dollar payment restrictions on China, China may pressure countries around the world to use the yuan to make it an international currency. This would signify the start of a financial war between the US and China, potentially forcing countries worldwide to take sides in the financial sector.

Experts also say that if the US imposes dollar payment restrictions on China, not only China but also US companies trading with China will inevitably be affected. Although the impact would be very strong, it is a card that the US cannot easily play.

Meanwhile, China is accelerating efforts to internationalize the yuan, but it is still considered insufficient. According to recent statistics, the yuan accounts for only 1.66% of international payment transactions, far behind the dollar's 43%. Like almost all countries in the world, China still relies on the dollar for most international trade, finance, and investment activities.

This content was produced with the assistance of AI translation services.