A top China adviser says the U.S. could sanction all China banks and seize the country's overseas assets if bilateral relations continue to sour.
China needs to be prepared for the U.S. to resort to severe action, Chinese Academy of Social Sciences senior fellow Yu Yongding said during a forum organized by The Beijing News. The U.S. imposed sanctions on the Bank of Kunlun in 2012, he said.
Yu, who was also once an adviser to the People's Bank of China, said that apart from placing sanctions on banks the U.S. could go as far as seizing China's overseas assets and, thereby, inflict financial pain.
These possibilities simply can't be ruled out, Yu said. The U.S. has already made its first move with the administration of President Donald Trump threatening to ban TikTok if it doesn't find a U.S.-based buyer. Yu called this action a "shameless" way of attempting to take over a China company.
Fears are growing in China of an all-out "financial war" between the world's two largest economies. What started as a trade dispute has already spilled over into the technology sector resulting in sanctions imposed by both countries. The U.S. included Huawei Technologies and dozens of other companies on its trade blacklist - which bars them from doing business with U.S. companies.
Experts say a financial war with the U.S. would be devastating to China given the dominance of the U.S. dollar in cross-border investment and payments.
Last week the Trump administration imposed sanctions on 11 mainland and Hong Kong officials. Financial intuitions doing business with these individuals could be seen by the U.S. as potential collaborators.
Yu said this type of arbitrary action by the U.S. was something China must deal with. The U.S. could continue to use sanctions to pressure China and its financial system and "extort" institutions to bend to its demands, Yu said.
