Chinese regulators have held an emergency meeting with domestic and foreign banks to discuss how they could protect the country’s overseas assets from USled sanctions similar to those imposed on Russia for its invasion of Ukraine, according to people familiar with the discussion.
Officials are worried the same measures could be taken against Beijing in the event of a regional military conflict or other crisis. President Xi Jinping’s administration has maintained staunch support for Vladimir Putin throughout the crisis but Chinese banks and companies remain wary of transacting any business with Russian entities that could trigger US sanctions.
The internal conference, held on April 22, included officials from China’s central bank and finance ministry, as well as executives from dozens of local and international lenders such as HSBC, the people said. The ministry of finance said at the meeting that all large foreign and domestic banks operating in China were represented.
They added that the meeting began with remarks from a senior finance ministry official who said Xi’s administration had been put on alert by the ability of the US and its allies to freeze the Russian central bank’s dollar assets.
The officials and attendees did not mention specific scenarios but one possible trigger for such sanctions is thought to be a Chinese invasion of Taiwan, which China claims as its territory and has threatened to invade it if Taipei refuses to submit to its control indefinitely
“If China attacks Taiwan, decoupling of the Chinese and western economies will be far more severe than [decoupling with] Russia because China’s economic footprint touches every part of the world,” said one of the people briefed on the meeting.
Andrew Collier, managing director of Orient Capital Research in Hong Kong, said the Chinese government was right to be concerned “because it has very few alternatives and the consequences [of US financial sanctions] are disastrous”.
Senior regulators including Yi Huiman, chairman of the China Securities Regulatory Commission, and Xiao Gang, who headed the CSRC from 2013 to 2016, asked bankers in attendance what could be done to protect the nation’s