Chinese Regulators, Banks Reportedly Brainstorm Ways to Save Assets Threatened by US

Chinese state regulators held an emergency conference with major domestic and foreign banks to discuss means to protect the People’s Republic’s assets should the US impose sanctions similar to those it slapped on Russia in February, the Financial Times reports, citing people said to be familiar with the situation.

The meeting, said to have taken place on 22 April, reportedly involved officials from the People’s Bank of China, the country’s powerful central bank, as well as the Finance Ministry. Representatives from every major national bank took part, as did major foreign lenders operating in the Asian nation, such as HSBC, according to the paper’s sources.

In March, officials from the Russian Central Bank and the Ministry of Finance reported that the United States and its allies had seized "about $300 billion" of the country’s estimated $642 billion reserve cushion, with the US alone accounting for roughly $100 billion of that. In recent weeks, officials and lawmakers in Washington and Brussels have threatened to confiscate these assets, or transfer them to Ukraine.

The 22 April meeting did not include a discussion of possible scenarios under which China’s assets could be frozen, although one person briefed on the conference said a move by Beijing to resolve the Taiwan crisis by force might be one such cause.

“If China attacks Taiwan, decoupling of the Chinese and Western economies will be far more severe than Russia because China’s economic footprint touches every part of the world”, the person said.

The People’s Republic considers Taiwan to be an integral part of China, and has repeatedly vowed that the island will be reunified with the mainland, hopefully by peaceful means. At the same time, Beijing has warned that it will not hesitate to use more forceful measures should Taipei attempt to formally declare independence, either on its own or with US assistance.

The freeze on Russian assets isn’t the first time that the US and its allies have frozen or pilfered foreign wealth inside their jurisdictions, leading to questions about what logic Russian financial authorities were operating under when making the risky move to stash wealth in Western jurisdictions in the first place. Last year, Washington seized some $7 billion in Afghan assets trapped inside the United States after the fall of Kabul. In February, US President Joe Biden signed an executive order splitting the wealth into a "relief fund" and a "9/11 victims" compensation fund. The Taliban and Afghan rights groups slammed the move, saying Kabul desperately needed the frozen funds to rebuild the country after two decades of war and US and NATO occupation.

Before that, Western governments and banks pilfered tens of billions in assets belonging to Venezuela, Libya, and Iran, often using them for outlandish purposes. In 2018, for example, a New York judge ordered some $6 billion in Iranian assets to be paid out to the relatives of the victims of the 9/11 attacks, even though Iran had nothing to do with the act of terror and despite the fact that its military has been fighting al-Qaeda* since the 1990s.

Economists have warned about the detrimental effects that politically-motivated assaults on other countries' assets abroad could have on the stability of the Western-dominated economic system. In March, after Russian state assets in Western countries were frozen, Spiegel contributor Henrik Muller warned that “should fears spread that the US government could confiscate currency assets at any time, this could cause massive damage to the dollar” and undermine the sense of security that holdings in Western banks have traditionally instilled. This is particularly applicable to wealthy countries like China and the Gulf petro states, he stressed.