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Fear grips Beijing over possibility of Washington cutting off China's access to US dollar system

News Agencies | Updated on: 24 July 2020, 8:08 IST

The United States' willingness to reduce or completely cut off China's access to the US dollar system -- Swift -- has sent a sense of uneasiness in Beijing about the potential ramifications of a financial war with Washington, the South China Morning Post reported.

The Society for Worldwide Interbank Financial Telecommunication (Swift) is a network used by worldwide banks to send and receive information about financial transactions. It is one of the pieces of infrastructure that underpins the anchor role of the US dollar in international trade and investment. Globally, banks have correspondent relationships with US banks, through which they conduct US dollar transactions. Under this payment system, the White House can order US banks to stop processing transactions with certain individuals, institutions and countries, thus, denying them access to the US dollar payments system.

While China's Communist Party (CCP) seems to be tensed about its future amid the growing worldwide lashes against it over Xinjiang and Hong Kong, some have come out to soothe their fears.

Some political thinkers, who are supporters of the CCP, have opined that the US will not take drastic decisions with regard to China as it has with Iran and North Korea as the move will pose a risk to the US and global economy.

However, the risk for China is real as the US could use the US dollar's hegemony to attack Beijing if the relations continue to worsen, the thinkers said.

This sense of fear and debates have come in the backdrop of the US announcing sanctions on Chinese officials and entities behind the human right violations in Uighur-populated Xinjiang and undermining Hong Kong's autonomy.

Recently, US Secretary of State Michael Pompeo announced visa sanctions on certain employees of Chinese technology companies including Huawei that provide material support to regimes engaging in human rights abuses globally.

Earlier, he had announced visa restrictions on some Chinese officials under the Reciprocal Access to Tibet Act, 2018.

"Today I am announcing visa restrictions on PRC government and Chinese Communist Party officials determined to be 'substantially involved in the formulation or execution of policies related to access for foreigners to Tibetan areas,' pursuant to the Reciprocal Access to Tibet Act of 2018," Pompeo said on July 7.

The US had also announced the ending of the US-origin defence equipment exports to Hong Kong after the Chinese government imposed national security law in the city. 


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First published: 24 July 2020, 8:08 IST