China fears being cut off from US dollar payments system with annual loss of $300 BN

As the US-China relations are at an all-time low due to a range of issues, the communist regime of China now fears of America's willingness to minimize or complete sever off China's access to the US dollar system, according to Chinese media reports.

South China Morning Post (SCMP) reported that Beijing is experiencing "a sense of uneasiness about the potential ramifications of a financial war with Washington."

The Chinese Media outlet stated there is a general consensus that the US would not go to this extreme and cut off China from the globally established system which instrumental in international trade transactions, as the Chinese thinkers believed such a move would also constitute a significant risk to the US itself and to the global economy. However, the US has so far done this with Iran and North Korea; hence, a possibility cannot be refuted as the US could use US dollar’s hegemony to strike a blow to China if the relations continue to worsen, the thinkers said as reported by SCMP.

READ | China To Supply Almost A Billion Masks To US; Mouthpiece Waves Contract In Trump's Face

READ | After Houston, China May Ask US To Close A Consulate As Countermeasure: Report

SWIFT network

Society for Worldwide Interbank Financial Telecommunication (SWIFT) is an internationally recognised network for sending and receiving information about financial transactions. The system is used by banks worldwide. SWIFT network provides a universal way to get money from one country to another, providing a secure network for more than 10,000 financial institutions in 212 different countries. It plays a significant role in financial transactions across the world.

Foreign banks have correspondent relationships with US banks, through which they conduct US dollar transactions. The US government can order its banks to stop processing transactions with certain individuals, institutions and countries, denying them access to the US dollar payments system, said SCMP. However, thinkers opined that cutting off China from the dollar payments system will also cause major damage to the US while another believed that China could lose USD 300 billion in trade per year. Thinkers were warry that it would disrupt world peace.

READ | Pakistan Acts Against All-weather Ally China; Warns 'great Mischief Of Modern Time' TikTok

READ | China's Communist Party Member Wants Americans To Reelect Trump Amid Rising Tensions

China's fear

This sense of anxiety and arguments over whether the US will cut off China, have come up in the wake of the US announcing sanctions on Chinese officials and entities instrumental in the human right violations in Uighur-populated Xinjiang and undermining Hong Kong's autonomy.

Besides, the Trump administration has also announced visa sanctions on certain employees of Chinese technology companies including Huawei that provide material support to regimes engaging in human rights abuses globally. It also closed Houston's Chinese consulate in its latest countermeasures against China.

The US administration has been explicitly firing harsh criticisms on the Chinese Communist Regime over a range of issues, be it China's discreet way of handling the pandemic; or the imposition of 'draconian' National Security Law in Hong Kong threatening the autonomy of Hong Kong; China's expansionist policies in the Indo-Pacific waters by strong-arming smaller nations in the South China Sea and claiming sovereignty over the water body; or China's aggression on the India-China border dispute in Eastern Ladakh.