Under the headline, “Wargaming a Western Freeze of China’s Foreign Reserves,” the Atlantic Council published a summary report on April 29 of what could ensue from any attempt to steal China’s foreign exchange reserves, as Russia’s have been stolen. Its author was Atlantic Council senior fellow Hung Tran, a former banker whose career includes serving as Deputy Director of the IMF and Executive Managing Director at the financier’s cartel, the International Institute of Finance.
The scale of any operation against China is far bigger than that against Russia, Tran notes. The exact composition of Chinese $3.2 trillion in foreign reserves is a state secret, but at least $1.1 trillion is in U.S. Treasury securities, and $490 in other equities, plus a goodly amount held in euros, yen, and pounds sterling subject also to freezing. In addition, Chinese companies hold some $145 billion of foreign direct investment (FDI) in the U.S., and about $83 billion in the European Union.
What countermeasures might China take that would impact Western economies?
Foreigners have $1.9 trillion in direct investment in China, and China might nationalize the hefty portion of that owned by the Western sanctioning countries. It could also freeze the $1.2 trillion-plus of Chinese domestic stocks and bonds owned by foreign investors. Then there is the $2.7 trillion in external debt held by Chinese companies, most of it in US dollars and euro, which China could stop servicing, using the same argument as Russia: that it is willing and able to pay, but is prevented from doing so by U.S. government actions. “A pause in servicing China’s external debt would inflict substantial losses on Western investors—largely through investment funds and pension funds,” Tran writes.
